On June 20, the FDIC adopted its final rule amending the resolution planning requirements for large banks. The amended rule will amend 12 C.F.R. Part 360 “Resolutions and Receivership Rules,” and, among other components, require a covered institution’s full resolution submission to include:

1. Identified Strategy – resolving issues in the event of a failure.
2. Failure Scenario – proof of assets in the event of a failure.
3. Executive Summary – summarizing the identified strategy with descriptions and discussions.
4. Organizational Structure – legal entities, core business lines, and branches.
5. Methodology for Material Designation
6. Separation from Parent – demonstrate the ability to operate separately from parent org.
7. Overall Deposit Activities – including foreign deposits, sweep arrangements, etc.
8. Critical Services – ensure continuity of the institution’s critical services in resolution.
9. Key Personnel – identified by title, function, location, core business line, etc.
10. Franchise Components – ensure that franchises are marketable in resolution.

Under the rule, depository institutions with more than $100 billion in total assets must submit a full resolution plan either biennially or triennially (most will file triennially, with the “largest and most systematic and interconnected” institutions required to file biennially). Depository institutions with at least $50 billion but less than $100 billion in total assets must submit more limited informational filings – which would not include an identified strategy for the institution’s resolution or proof of assets in the event of a failure – on a triennial basis. The FDIC noted that because such institutions will file less information, “the FDIC expects the engagement and capabilities testing [] will be a key component of its resolution planning for such firms and expects to conduct engagement and capabilities testing with most [of these institutions] in each cycle.” Failure to submit a full resolution submission, and address adequately a material weakness identified by the FDIC may lead to enforcement actions against non-compliant institutions. The rule will go into effect on October 1 and the FDIC will notify institutions of the date when their first full resolution submissions or interim supplements are due under the final rule (The FDIC will set a date for Group A Filers at least 270 days after the effective date, and the FDIC will set a date for Group B Filers at least a year after the effective date).

In an OCC news release, the Acting Comptroller of the Currency stated his support for the FDIC’s resolution plan rule, noting that when such plans are lacking, “consequences can include not just disorderly failure and the need for extraordinary government action, but also a broader loss of trust in banks and their regulators.” The Director of the CFPB, Rohit Chopra, also released a statement and noted that the sale of a failed bank to an even larger institution can result in substantial costs to the Deposit Insurance Fund. Chopra expressed support that rules requiring banks to demonstrate how they might be wound down would help the FDIC pursue alternative dissolution strategies for large banks, such as breaking up the bank into smaller components or reprivatizing it through an initial public offering.