Martin J. Gruenberg
Chairman
Federal Deposit Insurance Corporation
to the
Eurofi High Level Seminar 2016
Amsterdam, The Netherlands
April 21, 2016
Chairman
Federal Deposit Insurance Corporation
to the
Eurofi High Level Seminar 2016
Amsterdam, The Netherlands
April 21, 2016
1
Introduction
Good afternoon and thank you for the opportunity to take part today in the Eurofi High Level
Seminar. I would like to acknowledge the extraordinary contributions made by Jacques de
Larosière to advance the international financial regulatory dialogue, including under his Eurofi
Chairmanship. I would also like to offer my congratulations to David Wright as he assumes this
important responsibility. I have had the pleasure of working with David, who served as a
member of the FDIC’s Systemic Resolution Advisory Committee.
Today, I would like to talk with you about the significant progress that has been made to foster
cross-border cooperation among the major jurisdictions of the world on the resolution of
systemically important financial institutions, as well as the work of the FDIC on this critically
important issue.
The Resolution of Systemically Important Financial Institutions
Let me begin by providing some background on the FDIC's efforts in regard to systemic
resolution. This work has been at the forefront of our priorities during the post-crisis period.
When the financial crisis hit in 2008, major jurisdictions around the world were unprepared to
deal with the failure of a global, systemically important financial institution, or G-SIFI.
The crisis demonstrated that large, complex financial institutions can experience severe distress.
Lacking the necessary authorities to manage the orderly failure of such an institution,
policymakers were forced to choose between two bad options: taxpayer bailouts or financial
collapse.
In the United States, passage of the Dodd-Frank Act provided essential new authorities to
manage the orderly failure of a systemically important financial institution.
Living Wills
The act requires the largest bank holding companies and designated systemic nonbank financial
companies to prepare resolution plans, also referred to as "living wills." These living wills must
demonstrate that the firm could be resolved under bankruptcy without severe adverse
consequences for the financial system or the U.S. economy.
The FDIC and the Board of Governors of the Federal Reserve System are charged with
reviewing and assessing each firm's plan. If a plan does not demonstrate the firm's resolvability,
the FDIC and the Federal Reserve may jointly determine that it is not credible or would not
facilitate an orderly resolution of the company under the Bankruptcy Code and issue a notice of
deficiencies. If a firm fails to remediate the deficiencies identified in the joint notice, the
agencies may jointly impose additional capital, leverage, or liquidity requirements. The agencies
may also restrict the firm's growth, activities, or operations.
Introduction
Good afternoon and thank you for the opportunity to take part today in the Eurofi High Level
Seminar. I would like to acknowledge the extraordinary contributions made by Jacques de
Larosière to advance the international financial regulatory dialogue, including under his Eurofi
Chairmanship. I would also like to offer my congratulations to David Wright as he assumes this
important responsibility. I have had the pleasure of working with David, who served as a
member of the FDIC’s Systemic Resolution Advisory Committee.
Today, I would like to talk with you about the significant progress that has been made to foster
cross-border cooperation among the major jurisdictions of the world on the resolution of
systemically important financial institutions, as well as the work of the FDIC on this critically
important issue.
The Resolution of Systemically Important Financial Institutions
Let me begin by providing some background on the FDIC's efforts in regard to systemic
resolution. This work has been at the forefront of our priorities during the post-crisis period.
When the financial crisis hit in 2008, major jurisdictions around the world were unprepared to
deal with the failure of a global, systemically important financial institution, or G-SIFI.
The crisis demonstrated that large, complex financial institutions can experience severe distress.
Lacking the necessary authorities to manage the orderly failure of such an institution,
policymakers were forced to choose between two bad options: taxpayer bailouts or financial
collapse.
In the United States, passage of the Dodd-Frank Act provided essential new authorities to
manage the orderly failure of a systemically important financial institution.
Living Wills
The act requires the largest bank holding companies and designated systemic nonbank financial
companies to prepare resolution plans, also referred to as "living wills." These living wills must
demonstrate that the firm could be resolved under bankruptcy without severe adverse
consequences for the financial system or the U.S. economy.
The FDIC and the Board of Governors of the Federal Reserve System are charged with
reviewing and assessing each firm's plan. If a plan does not demonstrate the firm's resolvability,
the FDIC and the Federal Reserve may jointly determine that it is not credible or would not
facilitate an orderly resolution of the company under the Bankruptcy Code and issue a notice of
deficiencies. If a firm fails to remediate the deficiencies identified in the joint notice, the
agencies may jointly impose additional capital, leverage, or liquidity requirements. The agencies
may also restrict the firm's growth, activities, or operations.