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This section of the FEDERAL REGISTER
contains regulatory documents having general
applicability and legal effect, most of which
are keyed to and codified in the Code of
Federal Regulations, which is published under
50 titles pursuant to 44 U.S.C. 1510.
The Code of Federal Regulations is sold by
the Superintendent of Documents. Prices of
new books are listed in the first FEDERAL
REGISTER issue of each week.
Rules and Regulations Federal Register
58379
Vol. 76, No. 183
Wednesday, September 21, 2011
FEDERAL DEPOSIT INSURANCE
CORPORATION
12 CFR Part 360
RIN 3064–AD59
Resolution Plans Required for Insured
Depository Institutions With $50 Billion
or More in Total Assets
AGENCY: Federal Deposit Insurance
Corporation (‘‘FDIC’’).
ACTION: Interim final rule.
SUMMARY: The FDIC is adopting an
interim final rule (‘‘Rule’’), with request
for comments, requiring an insured
depository institution with $50 billion
or more in total assets to submit
periodically to the FDIC a contingent
plan for the resolution of such
institution in the event of its failure
(‘‘Resolution Plan’’). The Rule
establishes the requirements for
submission and content of a Resolution
Plan, as well as procedures for review
by the FDIC. The Rule requires a
covered insured depository institution
(‘‘CIDI’’) to submit a Resolution Plan
that should enable the FDIC, as receiver,
to resolve the institution under Sections
11 and 13 of the Federal Deposit
Insurance Act (‘‘FDI Act’’), 12 U.S.C.
1821 and 1823, in a manner that ensures
that depositors receive access to their
insured deposits within one business
day of the institution’s failure (two
business days if the failure occurs on a
day other than Friday), maximizes the
net present value return from the sale or
disposition of its assets and minimizes
the amount of any loss to be realized by
the institution’s creditors. The FDIC
finds that there is good cause and it is
in the public interest to adopt the Rule.
Resolution plans for large and complex
insured depository institutions are
essential for their orderly and least-cost
resolution. The Rule is intended to
address the continuing exposure of the
banking industry to the risks of
insolvency of large and complex insured
depository institutions, an exposure that
can be mitigated with proper resolution
planning. The Rule enables the FDIC to
perform its resolution functions most
efficiently through extensive planning
in cooperation with the CIDI and to
enhance its ability to evaluate potential
loss severity if an institution fails.
DATES: The Rule is effective January 1,
2012. Written comments on the Rule
must be received by the FDIC no later
than November 21, 2011.
ADDRESSES: You may submit comments
by any of the following methods:
Agency Web Site: http://
www.fdic.gov/regulations/laws/federal.
Follow instructions for Submitting
comments on the Agency Web Site.
E-mail: Comments@FDIC.gov.
Include ‘‘Resolution plans required for
insured depository institutions with $50
billion or more in total assets’’ in the
subject line of the message.
Mail: Robert E. Feldman, Executive
Secretary, Attention: Comments, Federal
Deposit Insurance Corporation, 550 17th
Street, NW., Washington, DC 20429.
Hand Delivery/Courier: Guard
station at the rear of the 550 17th Street
Building (located on F Street) on
business days between 7 a.m. and 5 p.m.
(EST).
Federal eRulemaking Portal: http://
www.regulations.gov. Follow the
instructions for submitting comments.
Public Inspection: All comments
received will be posted without change
to http://www.fdic.gov/regulations/laws/
federal including any personal
information provided. Comments may
be inspected and photocopied in the
FDIC Public Information Center, 3501
North Fairfax Drive, Room E–I002,
Arlington, VA 22226, between 9 a.m.
and 5 p.m. (EST) on business days.
Paper copies of public comments may
be ordered from the Public Information
Center by telephone at (877) 275–3342
or (703) 562–2200.
FOR FURTHER INFORMATION CONTACT:
Keith Ligon, Acting Associate Director,
Office of Complex Financial
Institutions, International Coordination
Branch (202) 898–3686, or James
Marino, Project Manager, Division of
Resolutions and Receiverships, (703)
516–5043, or Richard T. Aboussie,
Associate General Counsel, (703) 562–
2452, David N. Wall, Assistant General
Counsel, (703) 562–2440, Mark A.
Thompson, Counsel, (703) 562–2529,
Mark G. Flanigan, Counsel, (202) 898–
7426, or Shane Kiernan, Senior
Attorney, (703) 562–2632.
SUPPLEMENTARY INFORMATION:
I. Background and Authority for the
Rule
The FDIC is charged by Congress with
the responsibility for insuring the
deposits of banks and thrifts in the
United States, and with serving as
receiver of such institutions if they
should fail. As of December 31, 2010,
the FDIC insured approximately $6.2
trillion in deposits in more than 7,650
depository institutions. To evaluate
potential loss severity and to enable it
to perform its resolution functions most
efficiently, the FDIC is requiring each
insured depository institution with $50
billion or more in total assets to submit
periodically to the FDIC a Resolution
Plan. Currently, 37 insured depository
institutions are covered by the Rule.
Those institutions held approximately
$3.6 trillion in insured deposits or
nearly 60 percent of all insured deposits
as of December 31, 2010.
In implementing the deposit
insurance program and in efficiently
and effectively resolving failed
depository institutions, the FDIC
strengthens the stability of, and helps
maintain public confidence in, the
banking system in the United States. In
its efforts to achieve this objective and
to implement its insurance and
resolution functions, the FDIC requires
a comprehensive understanding of the
organization, operation and business
practices of insured depository
institutions in the United States, with
particular attention to the nation’s
largest and most complex insured
depository institutions.
To ensure that the FDIC can
effectively carry out these core
responsibilities, the Rule requires a
limited number of the largest insured
depository institutions to provide the
FDIC with essential information
concerning their structure, operations,
business practices, financial
responsibilities and risk exposures. The
Rule requires these institutions to
develop and submit detailed plans
demonstrating how such insured
depository institutions could be
resolved in an orderly and timely
manner in the event of receivership. The
Rule also makes a critically important
contribution to the FDIC’s
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58380 Federal Register / Vol. 76, No. 183 / Wednesday, September 21, 2011 / Rules and Regulations
1 See ‘‘Progress in the Implementation of the G20
Recommendations for Strengthening Financial
Stability’’ Reports of the Financial Stability Board
to G20 Finance Ministers and Central Bank
Governors dated February 15, 2011, and April 10,
2011.
2 See Financial Stability Board, ‘‘Consultative
Document: Effective Resolution of Systemically
Important Financial Institutions—
Recommendations and Timelines,’’ 17 (July 19,
2011), available at http://
www.financialstabilityboard.org/publications/
r_110719.pdf (‘‘An adequate, credible [recovery and
resolution plan] should be required for any firm
that is assessed by its home authority to have a
potential impact on financial stability.’’) Annex 5 of
the Consultative Document sets out a
comprehensive proposed framework and content
for such plans.
3 Sections 11 and 13 of the FDI Act, 12 U.S.C.
1821 and 1823.
4 See FRB and FDIC Notice of Proposed
Rulemaking: Resolution Plans and Credit Exposure
Reports Required, 76 FR 22648 (April 22, 2011).
The Final Rule regarding Resolution Plans under
Section 165(d) of the Dodd-Frank Act is being
issued concurrently with the Rule.
implementation of its statutory
receivership responsibilities by
providing the FDIC as receiver with the
information it needs to make orderly
and cost-effective resolutions much
more feasible. Based upon its
experience resolving failed insured
depository institutions (and in
particular, large and complex insured
depository institutions), the FDIC has
concluded that resolution plans for large
and complex insured depository
institutions are essential for their
orderly and least-cost resolution and the
development of such plans should begin
promptly.
Since the recent financial crisis began
in late 2008, financial authorities
throughout the world have recognized
and agreed that advance planning for
the resolution of large, complex
financial institutions is critical to
minimizing the disruption that a failure
of such an institution may have as well
as the costs of its resolution. At the 2009
Pittsburgh Summit, and in response to
the crisis, the G20 Leaders called on the
Financial Stability Board (‘‘FSB’’) to
propose possible measures to address
the ‘‘too big to fail’’ and moral hazard
concerns associated with systemically
important financial institutions.
Specifically, the G20 Leaders called for
the development of ‘‘internationally-
consistent firm-specific contingency and
resolution plans.’’ The FSB continues its
efforts to develop the international
standards for contingency and
resolution plans and to evaluate how to
improve the capacity of national
authorities to implement orderly
resolutions of large and interconnected
financial firms and periodically reports
its progress to the G20 Leaders.1
The FSB’s program has built on work
undertaken by the Basel Committee on
Banking Supervision’s Cross-border
Bank Resolution Group, co-chaired by
the FDIC, since 2007. In its final Report
and Recommendations of the Cross-
border Bank Resolution Group, issued
on March 18, 2010, the Basel Committee
emphasized the importance of pre-
planning and the development of
practical and credible plans to promote
resiliency in periods of severe financial
distress and to facilitate a rapid
resolution should that be necessary. In
its review of the financial crisis, the
Report found that one of the main
lessons was that the complexity and
interconnectedness of large financial
conglomerates made crisis management
and resolutions more difficult and
unpredictable.
Similarly, the FSB’s Principles for
Cross-Border Cooperation on Crisis
Management commit national
authorities to ensure that firms develop
adequate contingency plans, including
information regarding group structure,
and legal, financial and operational
intra-group dependencies; the
interlinkages between the firms and
financial system (e.g., in markets and
infrastructures) in each jurisdiction in
which they operate; and potential
impediments to a coordinated solution
stemming from the legal frameworks
and bank resolution procedures of the
countries in which the firm operates.
The FSB Crisis Management Working
Group has recommended that
supervisors ensure that firms are
capable of supplying in a timely fashion
the information that may be required by
the authorities in managing a financial
crisis. The FSB recommendations
strongly encourage firms to maintain
contingency plans and procedures for
use in a resolution situation (e.g.,
factsheets that could easily be used by
insolvency practitioners), and to review
them regularly to ensure that they
remain accurate and adequate. On July
19, 2011, the FSB issued a public
consultation on proposed measures to
address systemic risk and moral hazard
posed by systemically important
financial institutions, which includes
proposed measures for improved
resolution planning by firms and
authorities.2 The Rule supports and
complements these international efforts.
In addition, Section 165(d) of the
Dodd-Frank Wall Street Reform and
Consumer Protection Act (the ‘‘Dodd-
Frank Act’’), 12 U.S.C. 5365(d), adopted
July 21, 2010, mandates that each
covered company periodically submit to
the Board of Governors of the Federal
Reserve System (‘‘FRB’’), the Financial
Stability Oversight Council, and the
FDIC the plan of such company for
rapid and orderly resolution under the
Bankruptcy Code in the event of
material financial distress or failure
(‘‘DFA Resolution Plan’’). This
requirement applies to each nonbank
financial company subjected to
supervision by the Federal Reserve
Board under Title I of the Dodd-Frank
Act and each bank holding company
with assets of $50 billion or more,
including foreign bank holding
companies with U.S. financial
operations.
The Rule, originally proposed on May
17, 2010, is intended to complement the
resolution plan requirements of the
Dodd-Frank Act. The Rule requires each
insured depository institution with $50
billion or more in total assets to submit
periodically to the FDIC a contingent
plan for the resolution by the FDIC, as
receiver, of such institution under the
Federal Deposit Insurance Act (‘‘FDI
Act’’) in the event of the institution’s
failure. Currently, with the exception of
three thrifts covered by the Rule,
holding companies of each insured
depository institution covered by the
Rule are expected to file a DFA
Resolution Plan. While a DFA
Resolution Plan will describe the plan
to resolve each parent holding company
under the Bankruptcy Code, the Rule is
focused on planning the resolution of
the subsidiary insured depository
institution, a resolution that will not be
conducted under the Bankruptcy Code,
but rather will be conducted under the
receivership and liquidation provisions
of the FDI Act.3 The Rule sets forth the
elements that are expected to be
included in an insured depository
institution’s Resolution Plan. The
requirements for DFA Resolution Plans
are provided in FRB and FDIC
regulations relating thereto (‘‘Section
165(d) rule’’).4
The FDI Act gives the FDIC broad
authority to carry out its statutory
responsibilities, and to obtain the
information required by the Rule. The
FDIC’s roles as insurer and receiver
require a distinct focus on potential loss
severities, default risks, complexities in
structure and operations, and other
factors that impact risk to the Deposit
Insurance Fund and the ability of the
FDIC to conduct an orderly resolution.
The authority to issue the Rule is
provided by Section 9(a) Tenth of the
FDI Act, 12 U.S.C. 1819(a) Tenth, which
authorizes the FDIC to prescribe, by its
Board of Directors, such rules and
regulations as it may deem necessary to
carry out the provisions of the FDI Act
or of any other law that the FDIC is
responsible for administering or
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