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Financial Services Law Insights and Observations

FDIC, Fed issue new rules and guidance aimed to strengthen resolution planning at large banks

Bank Regulatory Federal Issues Agency Rule-Making & Guidance FDIC Federal Reserve Compliance

On August 29, the FDIC and the Federal Reserve Board issued a joint press release inviting public comment on proposed guidance that serves to toughen requirements for non-G-SIB large bank holding companies’ resolution plans, or “living wills” that set forth strategies for rapid and orderly resolution under bankruptcy in the event of financial distress or failure. The proposed guidance, which includes guidance for both domestic triennial full filers and guidance for foreign triennial full filers, will generally apply to certain bank holding companies and foreign banking associations with between $250 billion and $700 billion in total assets. This guidance is separate from the guidance previously issued to the largest and most complex companies, which is already in place. The guidance (i) is organized around key areas of potential vulnerability, such as capital, liquidity, and operational capabilities; (ii) provides agency expectations for both single point of entry and multiple point of entry strategy needs; and (iii) proposes that foreign banking organizations develop U.S. resolution strategies that complement their global resolution plans. The proposed guidance will be published in the Federal Register, with comments due by November 30, 2023.

Separately on August 29, the FDIC approved a notice of proposed rulemaking to enhance resolution planning for insured depository institutions (IDIs) with at least $100 billion in total assets. The proposed rule would strengthen existing IDI resolution planning requirements under 12 CFR § 360.10 and would require a resolution submission from covered IDIs every two years, with limited filings in between. Covered IDIs would be required to submit comprehensive resolution plans that 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.” Additionally, IDIs with total assets of at least $50 billion but less than $100 billion would submit more limited informational filings and would not be required to develop a resolution strategy. Comments on the proposed rule are due by November 30, 2023.