WASHINGTON - January 18, 2011 - Creditors and shareholders will now have to absorb some of the losses when the federal government steps in to dismantle large failing financial firms.

The Federal Deposit Insurance Corp. on Tuesday approved the new rule that was required under the financial regulatory law enacted last summer.

"Shareholders and unsecured creditors should understand that they, not taxpayers, are at risk," FDIC Chairman Sheila Bair said at a meeting of the agency's five-member board.

In the federal bailouts of big financial firms in 2008-09, many of the companies that had loaned them money had their debts covered by the government.

Under the financial overhaul law, Congress gave the FDIC the authority to wind down troubled firms and sell off their assets to protect the broader financial system. But it left some details for the FDIC to sort out.

The collapse of Lehman Brothers in the fall of 2008 prompted lawmakers to come up with a new process for dismantling teetering financial firms.

The rule allows the FDIC to make payments to some short-term creditors of the firms, such as to enable the firms to continue operating and pay employees. Creditors such as utility and software companies that provide essential services would be examples, FDIC officials said. The agency also could make payments to creditors in some cases to maximize the amount recovered for taxpayers from sales of the failing firms' assets.