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The staff of the Federal Deposit Insurance Corp said it is slowing down the proposal, one of the main elements of the recently passed financial reform law, to give other regulators and the industry more time to review it.

The FDIC board on Monday will instead be briefed by staff on issues related to the new authority and it will likely vote in early 2011 on a proposal to seek comment on specific issues.

The FDIC was considering voting on Monday on issuing an interim final rule that would have put in place some aspects of how the agency would handle the winding down of large financial firms.

Regulators who sit on the new Financial Stability Oversight Council asked the FDIC to give them more time to weigh in on the issue, an FDIC official said. The council will meet for the first time on October 1.

"Some members of the FSOC had really not had time to look it over," the official said.

Under the law, the government would designate certain financial companies as systemically important. That means the collapse of one of those companies could threaten the financial system. The FDIC has the power to seize and break them up if they are heading toward collapse.

The FDIC is charged with liquidating these institutions much as it does with banks that take deposits.

The new authority is part of an effort to end the notion that certain institutions are "too big to fail."

The lack of such a mechanism forced the U.S. government to treat shaky financial giants on an ad hoc basis during the crisis -- crafting massive bailouts for companies such as AIG (AIG.N), while letting Lehman Brothers (LEHMQ.PK) collapse.

As part of this new authority, large financial institutions must write living wills that regulators would use to dismantle them if they became insolvent.

The law allows the FDIC to move certain parts of failing institutions' business into a separate entity so that they can be sold at a later date.

An FDIC official said on Monday the agency staff has decided that subordinated debt, long-term bondholders and shareholders should not be allowed to be moved into this entity. The official said the agency hoped this would further the idea that the era of "too big to fail" is over.

At a forum on the issue last month, financial representatives raised concerns about how creditors would be treated during a liquidation.

On a separate issue, the agency will also vote on Monday on a final rule that would give federal protection to securitizations backed by home loans and other consumer debt if they meet higher standards and banks retain some of the risk associated with the products.