The FDIC is cracking down on large banks with over $100 billion in assets, requiring them to submit comprehensive resolution plans under a final revised rule approved by the FDIC Board of Directors. The move aims to strengthen the agency’s ability to undertake an efficient and effective resolution under the Federal Deposit Insurance Act in the event of bank failure.
Under the rule, banks with total assets of at least $100 billion will be required to submit comprehensive resolution plans that meet enhanced standards. This includes a full resolution submission every three years, with limited supplements filed in the off years. Covered IDIs affiliated with U.S. global systemically important banking organizations must file a full resolution submission every two years.
The FDIC’s new rule also bolsters engagement between the agency and covered IDIs on resolution matters, requiring periodic testing to validate key capabilities and processes needed in a resolution. This includes continuation of critical banking services and potential marketing of the institution’s franchise or its components.
The final rule enhances the criteria to assess the credibility of IDIs’ resolution submissions and the FDIC’s approach to providing feedback. The agency will require IDIs with total assets of at least $50 billion but less than $100 billion to submit more limited ‘informational filings’ to assist in their potential resolution.
The FDIC’s existing IDI resolution planning framework under 12 CFR § 360.10 has been strengthened by the new rule, which will take effect on October 1, 2024. The first submissions are expected next year. The agency has issued a final rule that incorporates several changes from the proposed rule published in September of 2023.
The FDIC’s move is a significant step towards strengthening the stability of the financial system and ensuring that large banks are prepared to withstand potential failures. The agency’s efforts to enhance resolution planning will provide greater clarity and transparency for institutions and stakeholders alike.
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