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Speeches, Statements & Testimonies
Statement by Martin J. Gruenberg, Chairman, FDIC, On Proposed Dodd-Frank Act Title I Resolution Plan Guidance

The FDIC Board is considering today issuing proposed guidance, jointly with the Board of Governors of the Federal Reserve System, for resolution plans required under Title I of the Dodd-Frank Act for banks with assets between $250 and $700 billion.

The Dodd-Frank Act established a statutory requirement for covered companies to develop plans for their rapid and orderly resolution. 1 The FDIC and the Federal Reserve have the responsibility under the law to review and assess those plans, to provide appropriate feedback and guidance for further plan development, and to make findings and determinations of credibility as warranted. 2

The objective of the guidance being proposed today is to enhance the Title I resolution plans prepared and submitted by a group of firms with assets between $250 and $700 billion that includes the largest regional banks.

Similar to the first two cases considered by the FDIC Board today, the proposed guidance focuses on a set of large regional banking organizations that are just below the U.S. global systemically important banking organizations in terms of their size, complexity and the potential impact of their failure on U.S. financial stability.

Under the Dodd-Frank Act, as implemented by rulemaking of the FDIC and the Federal Reserve, these banking organizations are required to submit resolution plans every three years. 3 Many of these institutions have submitted plans for several cycles.  The FDIC and the Federal Reserve have provided individual feedback on these prior submissions but, unlike the U.S. GSIBs, the agencies have not previously provided guidance to this set of firms to clarify resolution planning expectations.  The agencies had begun developing such guidance prior to the bank failures earlier this year.  That recent experience only reinforced the value of providing such guidance to facilitate the further development of these institutions’ resolution plans and underlying capabilities.

The proposed guidance draws upon the guidance that the FDIC and the Federal Reserve previously issued to the U.S. global systemically important banking organizations and certain large foreign banking organizations. 4 It reflects observations drawn from the most recent resolution plans submitted by this group of institutions.  In addition, the proposed guidance addresses certain capabilities that are essential for firms to have to effect an orderly resolution such as those necessary to project the capital and liquidity needed to carry out their plan; operational capabilities related to payment, clearing and settlement activities; collateral; management information systems; and shared and outsourced services.

The proposed guidance consists of two documents, one addressed to domestically-controlled institutions and the other to foreign-based banking organizations.  This bifurcation reflects the important differences between the expected resolution of these two types of organizations.

Further, consistent with the long-held approach of allowing a firm to choose the resolution strategy that works best for it, both documents are segmented by the two types of strategies firms have previously presented in their Title I submissions -- specifically, a Single Point of Entry strategy or a Multiple Point of Entry strategy.

The proposed guidance would enable these institutions to continue to submit resolution plans using the resolution strategies they believe would be most effective.  It also would help ensure that each institution’s resolution plan addresses adequately the key resolution vulnerabilities of the firm and its selected strategy, including appropriately supporting the assumptions underlying the successful execution of its chosen strategy.  The proposed guidance for foreign-based organizations also addresses resolution issues presented by U.S. branches of a foreign bank and the interaction between the home country resolution strategy for the firm and the resolution plan strategy for its U.S. operations and entities.

This guidance would be another valuable component of efforts by the FDIC and the Federal Reserve Board to strengthen resolution planning for large regional banking organizations.  The objective of this work remains to reduce the risk to U.S. financial stability that the failure of one of these organizations could present.

I support the proposed guidance and look forward to reviewing the comments we receive.  As with the other matters acted on today, I would like to thank the staff of the FDIC for their hard work in putting forward this proposal.  I would like also to thank the staff of the Federal Reserve for their collaboration and contribution to this important step in advancing resolution readiness for large regional banks.

  • 1

    Section 165(d) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, PL 111-203, 124 Stat. 1376 (July 21 2010, codified at 12 USC 5365.

  • 2

    12 USC 5365(d)(4); see also FDIC implementing regulations at 12 CFR 381.4(b).

  • 3

    12 CFR 381 for the FDIC and 12 CFR Part 243 (Regulation QQ) for the Federal Reserve.

  • 4

    Available at FDIC: Resolution Authority - News and Information

Last Updated: August 29, 2023