1) Aug 29 [press release] -- The Federal Deposit Insurance Corporation (FDIC) Board of Directors today approved a notice of proposed rulemaking to strengthen resolution planning for insured depository institutions (IDIs) with at least $100 billion in total assets.
In addition, the FDIC’s Board joined with other federal regulators to propose new long-term debt requirements for large banks and their holding companies and new resolution planning guidance for living wills for large bank holding companies. These three proposals were developed to enhance the stability and resilience of the U.S. banking system, to reduce the costs and impacts of large bank resolution, and to support the rapid and orderly resolution of their holding companies.
The FDIC’s proposed IDI Planning Rule would strengthen the existing IDI resolution planning requirements under 12 CFR § 360.10. The proposal would require a resolution submission from covered IDIs every two years with more limited supplements filed in the off years.
IDIs with total assets of at least $100 billion would be required to submit comprehensive resolution plans to provide additional optionality to support the FDIC’s efficient and effective resolution of a large IDI under the Federal Deposit Insurance Act. These resolution plans would enhance current IDI resolution planning requirements by incorporating useful elements of existing guidance and important lessons learned from past plan reviews and from past large bank resolutions, including those earlier this year.
Under this proposal, IDIs with total assets of at least $50 billion but less than $100 billion would submit more limited informational filings to provide the FDIC with critical information to assist in their potential resolution. These institutions would not be required to develop a resolution strategy as part of their submissions.
If the proposed rule is finalized, the first submissions would be expected in early 2025. Comments on the proposal are due by November 30, 2023.
https://www.fdic.gov/news/press-releases/2023/pr23066.html
2) Sept 19 -- The Federal Deposit Insurance Corporation (FDIC) is seeking comment on a proposal to revise its current rule that requires the submission of resolution plans by insured depository institutions (IDIs) with $50 billion or more in total assets. The proposal would modify the current rule by revising the requirements regarding the content and timing of resolution submissions as well as interim supplements to those submissions provided to the FDIC by IDIs with $50 billion or more in total assets in order to support the FDIC's resolution readiness in the event of material distress and failure of these large IDIs. IDIs with $100 billion or more in total assets will submit full resolution plans, while IDIs with total assets between $50 and $100 billion will submit informational filings. The proposed rule would also enhance how the credibility of resolution submissions will be assessed, expand expectations regarding engagement and capabilities testing, and explain expectations regarding the FDIC's review and enforcement of IDIs' compliance with the rule. Comments must be received by November 30, 2023.
The FDIC's regulation “Resolution plans required for insured depository institutions with $50 billion or more in total assets, ” issued in 2012 (current rule), requires insured depository institutions (IDIs) with $50 billion or more in total assets (covered IDIs or CIDIs) to submit resolution plans periodically. This resolution plan requirement was established to facilitate the FDIC's readiness to resolve a CIDI under the Federal Deposit Insurance Act of 1950, as amended (FDI Act) in the event of its insolvency.
This proposal builds on the FDIC's more than a decade-long experience implementing the current rule, providing guidance and feedback to CIDIs, and leveraging the content of submissions for the development of resolution strategies by the FDIC. Through this process, the FDIC has gained a better understanding of the challenges of resolving CIDIs and the importance of resolution plans and other related submissions to facilitate the FDIC's readiness in the event of a failure of one of these CIDIs. Part of the challenge arises from the wide range of business models and structures among CIDIs. While some of these CIDIs are engaged largely in traditional banking activities, with nearly all assets and activities conducted within the CIDI or its subsidiaries (the bank chain), others conduct significant non-banking activities. Many of the CIDIs have a broker-dealer subsidiary or affiliate that provides services to bank customers. The CIDIs subject to the current rule also include banks primarily engaged in a particular business segment, such as credit card services, as well as U.S. IDIs that are part of large foreign banking organizations. There is no one-size-fits-all resolution approach for these institutions; rather, the FDIC must be prepared to execute a range of resolution options, recognizing the trade-offs among those options. The FDIC's development of resolution strategies—and its assessment of the options and trade-offs that inform them—benefit from the CIDI's knowledge of its own firm, an understanding of the CIDI's relevant capabilities, and an awareness of the impediments to executing an orderly resolution of the CIDI. Across the different CIDI business models and structures, there are a variety of factors that increase the challenges and complexity of resolution in the event of the failure of these large banks. These factors include deposit profile as well as size and organizational complexity. . . .
FRN:
https://www.federalregister.gov/d/2023-19266 [47 pages]
