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21600 Federal Register / Vol. 84, No. 93 / Tuesday, May 14, 2019 / Proposed Rules
FEDERAL RESERVE SYSTEM
12 CFR Part 243
[Regulation QQ; Docket No. R–1660]
RIN 7100–AF47
FEDERAL DEPOSIT INSURANCE
CORPORATION
12 CFR Part 381
RIN 3064–AE93
Resolution Plans Required
AGENCY: Board of Governors of the
Federal Reserve System (Board) and
Federal Deposit Insurance Corporation
(Corporation).
ACTION: Notice of proposed rulemaking.
SUMMARY: The Board and the
Corporation (together, the agencies) are
inviting comment on a proposal to
amend and restate the jointly issued
regulation (the Rule) implementing the
resolution planning requirements of
section 165(d) of the Dodd-Frank Wall
Street Reform and Consumer Protection
Act (the Dodd-Frank Act). The proposal
is intended to reflect improvements
identified since the Rule was finalized
in November 2011 and to address
amendments to the Dodd-Frank Act
made by the Economic Growth,
Regulatory Relief, and Consumer
Protection Act (EGRRCPA). The
proposed amendments to the Rule
include a proposal by the Board to
establish risk-based categories for
determining the application of the
resolution planning requirement to
certain U.S. and foreign banking
organizations, consistent with section
401 of EGRRCPA, and a proposal by the
agencies to extend the default resolution
plan filing cycle, allow for more focused
resolution plan submissions, and
improve certain aspects of the Rule.
DATES: Comments should be received by
June 21, 2019.
ADDRESSES:
Board: You may submit comments,
identified by Docket No. R–1660 and
RIN No. 7100–AF 47, by any of the
following methods:
Agency Website: http://
www.federalreserve.gov. Follow the
instructions for submitting comments at
http://www.federalreserve.gov/
generalinfo/foia/ProposedRegs.cfm.
Email: regs.comments@
federalreserve.gov. Include the docket
number in the subject line of the
message.
Fax: (202) 452–3819 or (202) 452–
3102.
Mail: Ann Misback, Secretary,
Board of Governors of the Federal
Reserve System, 20th Street and
Constitution Avenue NW, Washington,
DC 20551.
All public comments will be made
available on the Board’s website at
http://www.federalreserve.gov/
generalinfo/foia/ProposedRegs.cfm as
submitted, unless modified for technical
reasons or to remove personally
identifiable information at the
commenter’s request. Accordingly, your
comments will not be edited to remove
any identifying or contact information.
Public comments may also be viewed
electronically or in paper in Room 146,
1709 New York Avenue NW,
Washington, DC 20006, between 9:00
a.m. and 5:00 p.m. on weekdays.
Corporation: You may submit
comments, identified by RIN 3064–
AE93, by any of the following methods:
Agency website: https://
www.fdic.gov/regulations/laws/federal.
Follow the instructions for submitting
comments on the Agency website.
Email: comments@fdic.gov. Include
RIN 3064–AE93 on the subject line of
the message.
Mail: Robert E. Feldman, Executive
Secretary, Attention: Comments/RIN
3064–AE93, Federal Deposit Insurance
Corporation, 550 17th Street NW,
Washington, DC 20429.
Hand Delivery/Courier: Comments
may be hand delivered to the 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.
All comments received must include the
agency name (FDIC) and RIN 3064–
AE93.
Public Inspection: All comments
received, including any personal
information provided, will be posted
generally without change to https://
www.fdic.gov/regulations/laws/federal.
FOR FURTHER INFORMATION CONTACT:
Board: Michael Hsu, Associate
Director, (202) 452–4330, Catherine
Tilford, Assistant Director, (202) 452–
5240, and Kathryn Ballintine, Lead
Financial Institution Policy Analyst,
(202) 452–2555, Division of Supervision
and Regulation; or Laurie Schaffer,
Associate General Counsel, (202) 452–
2272, Jay Schwarz, Special Counsel,
(202) 452–2970, or Steve Bowne,
Counsel, (202) 452–3900, Legal
Division, Board of Governors of the
Federal Reserve System, 20th and C
Streets NW, Washington, DC 20551. For
users of Telecommunications Device for
the Deaf (TDD), (202) 263–4869.
Corporation: Lori J. Quigley, Deputy
Director, Institutions Monitoring Group,
lquigley@fdic.gov; Robert C. Connors,
Associate Director, Large Bank
Supervision Branch, rconnors@fdic.gov,
Division of Risk Management
Supervision; Alexandra Steinberg
Barrage, Associate Director, Resolution
Strategy and Policy, Office of Complex
Financial Institutions, abarrage@
fdic.gov; David N. Wall, Assistant
General Counsel, dwall@fdic.gov;
Pauline E. Calande, Senior Counsel,
pcalande@fdic.gov; Celia Van Gorder,
Supervisory Counsel, cvangorder@
fdic.gov, or Dena S. Kessler, Counsel,
dkessler@fdic.gov, Legal Division,
Federal Deposit Insurance Corporation,
550 17th Street NW, Washington, DC
20429.
SUPPLEMENTARY INFORMATION:
Table of Contents
I. Introduction
II. Overview of the Resolution Planning
Process to Date
III. Overview of the Resolution Plan Proposal
A. Identification of Firms Subject to the
Resolution Planning Requirement and
Filing Groups
B. Resolution Plan Content
C. Critical Operations Methodology and
Reconsideration Process
D. Clarifications to the Rule
E. Alternative Scoping and Tailoring
Criteria
IV. Transition Period
V. Impact Analysis
VI. Regulatory Analysis
A. Paperwork Reduction Act
B. Regulatory Flexibility Act
C. Riegle Community Development and
Regulatory Improvement Act of 1994
D. Solicitation of Comments on the Use of
Plain Language
I. Introduction
Section 165(d) of the Dodd-Frank Act
and the jointly-issued Rule require
certain financial companies (covered
companies) to report periodically to the
agencies their plans for rapid and
orderly resolution under the U.S.
Bankruptcy Code in the event of
material financial distress or failure.
The goal of the Dodd-Frank Act
resolution planning process is to help
ensure that a covered company’s failure
would not have serious adverse effects
on financial stability in the United
States. The Dodd-Frank Act and the
Rule require a covered company to
submit a resolution plan for review by
the agencies. The resolution planning
process requires covered companies to
demonstrate that they have adequately
assessed the challenges that their
structures and business activities pose
to a rapid and orderly resolution in the
event of material financial distress or
failure and that they have taken action
to address those issues, including
through the development of appropriate
capabilities by those firms more likely
to pose a risk to U.S. financial stability.
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21601Federal Register / Vol. 84, No. 93 / Tuesday, May 14, 2019 / Proposed Rules
1 12 U.S.C. 5365(d)(4), (5); 12 CFR 243.5(b), .6(a);
12 CFR 381.5(b), .6(a).
2 EGRRCPA also provides that any bank holding
company, regardless of asset size, that has been
identified as a U.S. GSIB under the Board’s U.S.
GSIB surcharge rule shall be considered a bank
holding company with $250 billion or more in total
consolidated assets for purposes of the application
of the resolution planning requirement. EGRRCPA
section 401(f).
3 12 U.S.C. 5365(a); EGRRCPA section
401(a)(1)(B)(iii) (to be codified at 12 U.S.C.
5365(a)(2)(C)). See also EGRRCPA section 401(g).
4 Prudential Standards for Large Bank Holding
Companies and Savings and Loan Holding
Companies (Proposed Rule), 83 FR 61408
(November 29, 2018).
5 Prudential Standards for Large Foreign Banking
Organizations; Revisions to Proposed Prudential
Standards for Large Domestic Bank Holding
Companies and Savings and Loan Holding
Companies (April 8, 2019), https://
www.federalreserve.gov/newsevents/pressreleases/
files/foreign-bank-fr-notice-1-20190408.pdf.
6 In the case of capital standards for foreign
banking organizations, categories would apply
based on the characteristics of the firm’s U.S.
intermediate holding company. That methodology
is not relevant to this proposal.
Among other requirements, the Rule
requires each covered company to
submit an annual resolution plan that
includes a strategic analysis of the
plan’s components, a description of the
range of specific actions the covered
company proposes to take in resolution,
and descriptions of the covered
company’s organizational structure,
material entities, and interconnections
and interdependencies. The Rule also
requires that resolution plans include a
confidential section that contains
confidential supervisory and proprietary
information submitted to the agencies,
and a separate section that the agencies
make available to the public.
II. Overview of the Resolution Planning
Process to Date
The implementation of the Rule has
been an iterative process aimed at
strengthening the resolvability and
resolution planning capabilities of
covered companies. Since the
finalization of the Rule in 2011, the
agencies have reviewed multiple
resolution plan submissions and have
provided feedback and guidance to
assist the covered companies in their
development of subsequent resolution
plan submissions. As part of the
iterative process, the agencies have
increasingly tailored feedback and
guidance to take into account
characteristics of covered companies
including their size, business models,
and risk profiles, and, for a foreign-
based organization, the scope of
operations in the United States. Based
on these factors, the agencies have
allowed certain covered companies to
file resolution plans containing a subset
of a full resolution plan’s informational
content.
The resolution plans’ informational
content and strategic analysis and the
covered companies’ capabilities to
execute their resolution strategies have
developed over time. As both the
covered companies’ submissions and
the agencies’ feedback have matured
over several resolution plan cycles, the
Rule’s annual filing requirement has
been a challenging constraint for both
the agencies and covered companies
and has become less necessary. The
agencies have noted that the annual
filing cycle does not always permit
sufficient time for the review of
resolution plan submissions and the
development of meaningful feedback
and guidance. The agencies also
recognize that covered companies
require time to understand and address
the feedback and to incorporate any
changes into their next resolution plan
filings. In recognition of the challenges
associated with an annual resolution
plan filing, the agencies have extended
plan filing deadlines over the last few
submission cycles to provide at least
two years between resolution plan
filings.
The resolution planning process and
other resolution-related regulatory
changes have focused the covered
companies on developing both
resolution plan informational content,
including strategic analysis, and the
capabilities to improve their
resolvability. Given the complexity of
their operations, the U.S. global
systemically important banks (U.S.
GSIBs), in particular, have taken
significant and material actions to
address their resolvability. Over the past
several years, these covered companies
have enhanced their resolution
strategies and addressed key resolution
vulnerabilities by modelling resolution
liquidity and capital needs,
rationalizing legal structures,
developing governance mechanisms to
increase the likelihood of timely entry
into resolution, and more clearly
identifying and mitigating
organizational dependencies, among
other changes. Consistent with the
agencies’ feedback, firms have
continued to build upon their respective
capabilities to support their
resolvability amidst ongoing changes in
their businesses and in markets. If the
agencies jointly determine that a
resolution plan is not credible or would
not facilitate an orderly resolution, the
covered company must remedy the
deficiencies in the resolution plan
jointly identified by the agencies. If the
covered company fails to adequately
remedy the deficiencies within the time
period specified by the agencies, the
agencies may jointly impose more
stringent prudential requirements on the
company until the deficiencies are
remedied.1
EGRRCPA revised the resolution
planning requirement as part of the
changes the law made to application of
the enhanced prudential standards in
section 165 of the Dodd-Frank Act.
Specifically, EGRRCPA raised the $50
billion minimum asset threshold for
general application of the resolution
planning requirement to $250 billion in
total consolidated assets, and provides
the Board with discretion to apply the
resolution planning requirement to
firms with total consolidated assets of
$100 billion or more, but less than $250
billion in total consolidated assets.2 The
threshold increase occurs in two stages.
Immediately on the date of enactment,
firms with total consolidated assets of
less than $100 billion (for foreign
banking organizations, $100 billion in
total global assets) were no longer
subject to the resolution planning
requirement.
Eighteen months after the date of
EGRRCPA’s enactment, the threshold is
raised to $250 billion in total
consolidated assets. However,
EGRRCPA provides the Board with the
authority to apply resolution planning
requirements to firms with $100 billion
or more and less than $250 billion in
total consolidated assets. Specifically,
under section 165(a)(2)(C) of the Dodd-
Frank Act, as revised by EGRRCPA, the
Board may, by order or rule, apply the
resolution planning requirement to any
firm or firms with total consolidated
assets of $100 billion (for foreign
banking organizations, $100 billion in
total global assets) or more.3
Consistent with section 401 of
EGRRCPA, the Board has issued two
separate proposals to revise the
framework for determining the
prudential standards that should apply
to large U.S. banking organizations
(domestic tailoring proposal) 4 and to
large foreign banking organizations
(FBO tailoring proposal 5 and together
with the domestic tailoring proposal,
the tailoring proposals). Among other
provisions, the tailoring proposals
identify distinct standards applicable to
firms for the purpose of calibrating
requirements. The tailoring categories
established in the tailoring proposals 6
are as follows:
Category I standards would apply
to:
Æ U.S. GSIBs,
Category II standards would apply
to:
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