FDIC Board Member Norton discusses resolution planning at ABA meeting

This story appeared in Bank Digest.

Federal Deposit Insurance Corporation Board Member Jeremiah O. Norton discussed the current state of resolution planning in remarks to the American Bankers Association annual convention in New Orleans, La. According to Norton, there seems to be universal agreement that large and complex financial institutions should be resolvable in an orderly way. "Without question," he said, "a great deal of effort from the official sector, private enterprise, academia, and the legal community has been spent addressing impediments and complications of differing resolution frameworks." However, Norton said there remain serious issues to consider and challenges to overcome before reaching the consensus policy objective. 

With respect to Title I of the Dodd-Frank Act, Norton stated, Congress afforded the regulatory agencies significant authorities to address resolvability of large and complex financial institutions. The agencies must arrive at a view on how to carry out their joint duties and responsibilities under the law. Under Title II of the Act, Norton continued, the agencies not only must work through issues such as the debt requirement and potential competitive dynamics, but also must deal with other issues like the uncertainty around legal authority of foreign law contracts in a resolution.

Norton said the Federal Reserve Board and the FDIC have been granted significant authorities in the resolution process; however, he cautioned, the way in which the agencies choose to exercise their respective and joint powers will have a considerable bearing on the outcome of resolvability. "The obstacles to resolution will not solve themselves, and thus it will take continued vigilance and effort to achieve the mission."