FDIC issued proposal to amend the resolution plan rule to require the submission of resolution plans/information filings by Covered insured depository institutions (CIDIs).
Amended and restated current IDI resolution plan rule (12 CFR 360.10) requirements.
With respect to informational content and capabilities, building on prior rule, previously issued guidance, and experience gained in past plan reviews and bank resolutions.
FDIC Vice Chair Hill and Director McKernan voted against the proposed amendments.
OCC Comptroller Hsu and FDIC Chairman Gruenberg issued statements in support.
CFPB Chopra issued statement on proposals that protect public in the event of failure.
Related Actions
In 2021, lifted the moratorium on submissions for CIDIs with $100bn/more in assets.
Statement on resolution plans for insured depository institutions described how the FDIC planned to implement the rule for CIDIS with $100bn/more in assets, #109393.
Chairman Gruenberg remarked on resolution of large regional bank lessons, #182128.
Rule Provisions
Proposal created 2 groups of CIDIs with different submission content requirements.
Ensured FDIC had access to material data needed to resolve CIDC in event of failure.
All CIDIs must participate in engagement and capabilities testing regarding matters related to resolution submissions and information required under the proposed rule.
Covered IDIs would file respective resolution plans or informational filings biennially with limited information supplements to be provided in off-years, starting in 2025.
Must demonstrate capabilities to promptly establish a virtual due diligence data room.
Populate it with data necessary for parties to submit bids on the bank or its assets.
Group A Provisions
CIDIs with $100bn or more in total assets (group A) must submit full resolution plans containing identified strategy appropriate to CIDI for orderly and efficient resolution.
Identified strategy would generally expect, but not require, a default scenario whereby FDIC, as receiver of the failed institution, operates the institution under a bridge bank.
The CIDI's strategy must ensure timely access to insured deposits, maximize value from the sale or disposition of assets, and minimize any losses realized by creditors.
Address potential risks of adverse effects on US economic conditions/financial stability.
Group B Provisions
Required CIDIs with at least $50bn but less than $100bn in total assets (group B) to provide more limited resolution submissions in the form of an informational filing.
Would not require development of identified strategy for resolution nor demonstration of capabilities necessary to produce valuations related to least-cost determinations.
Consultation
Comments on proposal to amend resolution plan must be submitted by Nov. 30, 2023.
In Aug. 2023, Agencies issued proposed rulemaking re long-term debt, see #183338.
In Aug. 2023, FDIC proposed guidance on large bank resolution plans, see #183344.
Sep. 2023 FDIC Fed Reg Proposal
On Sep. 19, 2023, FDIC published proposal in federal register, comment Nov. 30, 2023
Jun. 2024 FDIC Adopted Final Rule
On Jun. 20, 2024, FDIC adopted final rule to strengthen resolution planning for CIDIs.
Key changes from proposal include modified approach to the timing of submissions.
Under the proposal, each CIDI would have been required to provide a full resolution submission every 2 years; final rule adopted 3-year submission cycle for most CIDIs.
Also, the final rule modified the approach to credibility determinations and feedback.
Finding of non-credibility must be supported by identification of one/more weaknesses.
In addition, the FDIC's final rule provides for significant finding as an intermediate level of feedback between informal observations, and defined material weakness.
The rule is effective Oct. 1, 2024, and the first submissions are expected next year.
Jul. 2024 FDIC Fed Reg Final Rule
On Jul. 9, 2024, FDIC published final rule in federal register, effective on Oct. 1, 2024.
Aug. 2024 FDIC Initial Submission Dates
On Aug. 8, 2024, FDIC published resolution plan submission dates for each CIDI.
Frequency of full resolution submissions under final rule for most CIDIs is three years.
Triennial filers will submit interim supplements for a specified content in the off years.
The frequency of full resolution submissions for CIDIs that are affiliates of US global systemically important banking organizations (U.S. G-SIB) is a two years period.
These biennial filers are not required to submit an interim supplement in years when the U.S. G-SIB parent of the CIDI files resolution plan under Title I of Dodd-Frank Act.
