On January 17, the Federal Deposit Insurance Corporation approved a final rule requiring an insured depository institution with $50 billion or more in total assets to submit periodic contingency plans to the FDIC for resolution in the event of the institution’s failure. These resolution plans "will inform the FDIC’s ability, as receiver, to resolve the institution 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 a 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."

Time will tell whether such plans will materially assist the FDIC in successfully resolving large-scale failures. The plans, which if done well will be costly to develop both in terms of time and money, will only be useful to the extent that the institutions submitting them put time and effort into crafting them, to the extent they are maintained in an up-to-date fashion, and to the extent they are profitably utilized by knowledgeable supervisory personnel in advance of an impending failure.

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