Living Wills: FDIC Approves Final Rules
By Dwight C. Smith, Alexandra Steinberg
Barrage, and Jeremy Mandell
On Tuesday morning, the Federal Deposit Insurance
Corporation ("FDIC") Board unanimously approved two rules regarding resolution
planning: one rule for large bank holding companies and nonbank financial
companies supervised by the Federal Reserve Board of Governors ("FRB"), and the
other rule for large banks.
The first rule (the "165(d) Rule") is a final rule
required by section 165(d) of the Dodd-Frank Act. The plan required under
section 165(d) is a detailed contingency plan that describes how large bank
holding companies and nonbank financial companies supervised by the FRB
(collectively, "Covered Companies") that are at risk of default can be sold,
broken up, or wound down quickly and effectively in a way that mitigates
serious adverse effects to U.S. financial stability. Covered Companies include
(i) all bank holding companies (including foreign banking organizations that
are or are treated as bank holding companies) with consolidated assets of $50
billion or more and (ii) all nonbank financial companies that the Financial
Stability Oversight Council designates for supervision by the FRB. A total of
124 Covered Companies are currently subject to the 165(d) Rule, the same number
noted in the proposed rule. As with the proposed 165(d) Rule, the vast majority
of Covered Companies appear to be foreign banking organizations.
The 165(d) Rule will ultimately be issued jointly by the
FDIC and the FRB (collectively, the "Agencies") and published in the Federal
Register. The timing for FRB approval is uncertain.
The second rule (the "IDI Rule") is an interim final rule
that covers banks and other insured depository institutions with $50 billion or
more in assets (collectively, the "CIDIs").5 The FDIC has identified 37 CIDIs.
Unlike the 165(d) Rule, the FDIC is the sole agency responsible for the IDI
Comments on the IDI Rule are due within 60 days of
publication in the Federal Register.6 The IDI Rule has an effective date of
January 1, 2012. [footnotes omitted]
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