Dodd-Frank News Center

FDIC considers easier living will rule for banks, thrifts

 This story appeared in Bank Digest.                                   

The Federal Insurance Deposit Corporation is publishing an advance notice of proposed rulemaking on ways it could tailor living will requirements for the banks and savings associations it supervises. The ANPR suggests possible changes in three areas: (1) creating tiered planning requirements based on each institution's size and complexity, as well as other factors; (2) reducing the frequency and required content for resolution plans, and eliminating the filing obligation for some smaller and less complex institutions; and (3) improving the communication between the agency and the institutions.

According to an FDIC staff memorandum, the agency is considering two possible approaches, one with three tiers and the other with two. Since the FDIC may adopt living will rule amendments before affected banks and thrifts are required to file their plans--July 1, 2020--the ANPR asks if filing should be delayed until the agency reaches and implements a decision. Comments on the ANPR must be received within 60 days of its publication in the Federal Register.

FDIC requests renewal of 'Resolution Plans' information collection

This story appeared in Bank Digest.                                   

The Federal Deposit Insurance Corporation is proposing to renew an existing information collection entitled "Resolution Plans Required for Insured Depository Institutions With $50 Billion or More in Total Assets." The collection is related to the requirement that an insured depository institution with $50 billion or more in total assets submit periodically to the FDIC a contingent plan for the resolution of the institution in the event of its failure. 

On July 30, 2018, the FDIC requested comment for 60 days on the proposal and is now giving notice of its plan to submit to the Office of Management and Budget a request to approve the renewal of the collection. Comments on the current notice must be submitted by Nov. 28, 2018.

FBOs and nonbank get resolution plan extension

This story appeared in Bank Digest.                                    

The Federal Reserve Board and Federal Deposit Insurance Corporation have extended the next resolution plan filing deadline for a designated nonbank to Dec. 31, 2019, and the deadline for four foreign banking organizations (FBOs) to July 1, 2020. The extensions will allow additional time for the agencies to provide feedback to the firms on their last submissions and for the firms to produce their next plans. Previously, the four FBOs--Barclays PLC, Credit Suisse Group AG, Deutsche Bank AG, and UBS AG--were required to submit their next plans by July 1, 2019. Prudential Financial Inc., the designated nonbank, was required to submit its plan on Dec. 31, 2018, pursuant to a previous extension (see 2017 No. 2288). In addition, the FDIC has extended the next filing due date for all insured depository institution resolution plan submissions to no sooner than July 1, 2020. These plans are required by FDIC regulation and are designed to enable the FDIC, as receiver, to resolve the institution under the Federal Deposit Insurance Act in a way that provides depositors timely access to insured deposits, maximizes net present value return, and minimizes creditor losses.

 

Agencies post public portions of resolution plans; announce deadline extension for two firms

This story appeared in Bank Digest. 

The Federal Deposit Insurance Corporation and the Federal Reserve Board have posted on their websites the public portions of annual resolution plans for eight large financial firms. The resolution plans, required by the Dodd-Frank Act and commonly known as living wills, must describe each company's strategy for rapid and orderly resolution under bankruptcy in the event of material financial distress or failure of the company. By regulation, resolution plans must be divided into a public section and a confidential section. 

In addition, the FDIC and the Fed have announced that American International Group, Inc., and Prudential Financial, Inc., will be required to submit their next resolution plans by Dec. 31, 2018, an extension from the previous date of Dec. 31, 2017. According to the agencies' joint release, the extension will allow the firms time to incorporate any guidance from the agencies into their next resolution plans.

GSIBs now subject to TLAC and long-term debt requirements

This story appeared in Bank Digest.

The Federal Reserve Board has issued a final rule that is intended to safeguard the financial stability of the United States by: enhancing the resolvability of covered bank holding companies (BHCs) under the U.S. Bankruptcy Code; enhancing the resolvability of covered BHCs under Title II of the Dodd-Frank Act; enhancing the resolvability of foreign global systemically important banking organization (GSIB) parents of covered intermediate holding companies (IHCs) under their home jurisdiction resolution regimes; and further increasing the resiliency of covered BHCs and covered IHCs. Specifically, the final rule will establish long-term debt (LTD) and total loss-absorbing capacity (TLAC) requirements, as well as restrictions on certain arrangements that could impede a resolution proceeding--clean holding company requirements--for covered BHCs and IHCs.

Agencies announce determinations on resolution plans submitted in October

This story appeared in Bank Digest.

The Federal Deposit Insurance Corporation and the Federal Reserve Board have announced that Bank of America, Bank of New York Mellon, JP Morgan Chase, and State Street adequately remediated deficiencies in their 2015 resolution plans. The agencies also announced that Wells Fargo did not adequately remedy all of its deficiencies and will be subject to restrictions on certain activities until the deficiencies are remedied. Resolution plans, required by the Dodd-Frank Act and commonly known as living wills, must describe the company's strategy for rapid and orderly resolution under bankruptcy in the event of material financial distress or failure of the company.

In April 2016, the agencies jointly determined that each of the 2015 resolution plans of the five institutions was not credible or would not facilitate an orderly resolution under the U.S. Bankruptcy Code. The agencies issued joint notices of deficiencies to the five firms detailing the deficiencies in their plans and the actions the firms must take to address them. Each firm was required to remedy its deficiencies by Oct. 1, 2016, or risk being subject to more stringent prudential requirements or to restrictions on activities, growth, or operations. The Fed is releasing the feedback letters issued to each of the five firms. The letters describe the steps the firms have taken to address the deficiencies outlined in the April 2016 letters. The feedback letter issued to Wells Fargo discusses the steps the firm has taken to address its deficiencies and those needed to adequately remedy the two remaining deficiencies.

Senator Sherrod Brown (D-Ohio), Ranking Member of the Senate Banking Committee, stated, "Today's joint determination is a reminder that Wall Street reform is working to rein in the megabanks that crashed our economy and got bailed out by taxpayers. Even one too big to fail bank is too many, and we need watchdogs that will continue to impose tough rules and strong penalties to make banks simpler and safer, not the opposite."

Banks get relief from living will requirements

This story appeared in Bank Digest.

A total of 84 firms with limited U.S. operations have been given permission by the Federal Deposit Insurance Corporation and the Federal Reserve Board to file reduced content resolution plans for their next three resolution plans. In their announcement, the FDIC and Fed noted that the first of these reduced content plans must be submitted to the agencies by Dec. 31, 2016.

Under the Dodd-Frank Act, bank holding companies with total consolidated assets of $50 billion or more, or foreign banks with $50 billion or more in global consolidated assets, must periodically submit resolution plans to the FDIC and the Fed. Each plan must describe the company's strategy for rapid and orderly resolution under the U.S. Bankruptcy Code or other applicable insolvency regime in the event of material financial distress or failure of the company.

The 84 firms granted relief each have less than $50 billion in total U.S. assets, are foreign banking organizations with limited U.S. operations, and have submitted prior plans that provide the agencies with an understanding of their limited U.S. operations. To file reduced content plans for the next three years, the firms must maintain less than $50 billion in U.S. assets and not experience any material events.