The Federal Deposit Insurance Corporation (FDIC) and the Board of Governors of the Federal Reserve System have jointly proposed new guidance to strengthen resolution plans for large bank holding companies. These ‘living wills’ are designed to ensure a rapid and orderly wind-down of institutions in the event of financial distress or failure.
Targeting banks with more than $250 billion in assets but not deemed the most complex, the proposed guidelines aim to address specific risks associated with these entities. They focus on key areas such as capital adequacy, liquidity management, and operational resilience during resolution processes.
The proposal also introduces agency expectations for both single-point and multiple-point entry resolution strategies. This distinction reflects different approaches that banks may take in resolving their issues quickly and efficiently. Additionally, foreign banking organizations would be expected to align their US resolution plans with global strategies, enhancing cross-border coordination.
Public comments on the proposed guidance are invited, with submissions due by November 30, 2023. The full text of the proposal will be published in the Federal Register, ensuring transparency and public engagement.
This initiative underscores the regulators’ commitment to maintaining financial stability and protecting depositors, while also ensuring that large banks can navigate potential crises without systemic risk.
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