On May 27, the Acting Comptroller of the Currency, Michael J. Hsu, delivered a speech emphasizing the importance of recovery planning in mitigating the risks associated with bank crises. Hsu argued that while preventing crises through risk management, capital and liquidity requirements, and strong supervision was the primary goal, having a robust recovery plan was critical for stabilizing banks and restoring confidence in stressful times. He noted his comments came in light of recent bank failures in the U.S. and abroad.

Acting Comptroller Hsu drew an analogy to the philosophical “trolley problem,” highlighting the difficult choices regulators face. Hsu emphasized how banks and their regulators need actionable recovery plans with options to sell certain portfolios or businesses, increase liquidity and capital, or reduce risk-weighted assets to avoid losses. The Acting Comptroller also detailed how effective recovery plans should incorporate timely triggers for action, thorough impact assessments, and clear communication with stakeholders. He concluded by calling for the application of recovery planning requirements to all large banks with at least $100 billion in assets (down from the current $250 billion in assets requirement) suggesting that applying recovery planning guidelines in this manner could have mitigated recent regional bank failures and limited losses to the Deposit Insurance Fund.