By Vernon Wessels

July 18 (Bloomberg) -- The Federal Deposit Insurance Corp. set new rules for U.S. banks that lets regulators take charge of paying off depositors in a move to prevent spillover in the event of a large failure.

The rules, which apply to 159 banks with at least $2 billion in U.S. deposits and either $20 billion in assets or 250,000 account holders, start Aug. 18, the Washington-based regulator said in a notice to banks published yesterday on the FDIC Web site. Banks have 18 months to comply.

The change will help pay off insured deposits as soon as possible and help ``maintain public confidence in the banking industry,'' the regulator said. It will also ``mitigate the spillover effects of a failure, such as risks to the payments system, problems stemming from depositor illiquidity and a substantial reduction in credit availability.''

IndyMac Bancorp Inc., with $19 billion of deposits, was seized by U.S. regulators on July 11 after it failed to raise cash amid the worst housing crisis since the Great Depression. The collapse of the Pasadena, California-based bank threatens to spur withdrawals from banks ranging from First BanCorp in Puerto Rico to Los Angeles-based Nara Bancorp Inc. as customers trim accounts below the $100,000 limit on deposit insurance, according to Sandler O'Neill & Partners LP.

Banks and brokers have taken more than $435 billion of writedowns and credit losses since the beginning of last year as mortgage-backed securities, CDOs, leveraged loans and other fixed- income assets lost value.

The new FDIC rules will require banks to standardize the information they provide on deposit accounts and to establish systems to automatically place holds on accounts with large deposits, the Wall Street Journal reported. The FDIC also proposed new rules for how it determines the value and nature of claims against a failed bank, the newspaper said.

To contact the reporter on this story: Vernon Wessels in London at vwessels@bloomberg.net

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