The Federal Deposit Insurance Corporation (FDIC) and the Federal Reserve Board announced the process for receiving and evaluating the initial resolution plans–also known as living wills–from the largest banking organizations operating in the United States. The agencies also gave a timetable for release of the public portion of such plans, which are due on July 2.
The Dodd-Frank Wall Street Reform and Consumer Protection Act requires that bank holding companies with total consolidated assets of $50 billion or more and nonbank financial companies designated by the Financial Stability Oversight Council for supervision by the Federal Reserve submit resolution plans annually to the FDIC and the Federal Reserve. Each plan "must describe the company’s strategy for rapid and orderly resolution under the Bankruptcy Code in the event of material financial distress or failure of the company." The FDIC and Federal Reserve must review each resolution plan and jointly may determine that a resolution plan is not credible or would not facilitate an orderly resolution of the company in bankruptcy. Companies subject to the rule are required to file their initial resolution plans in three groups and on a staggered schedule. By regulation, the plans must be divided into a public section and a confidential section. The public section of the plans will contain detailed information to allow the public to understand the business of the covered company. Information in the public portion will include details such as a description of the company’s core business lines and financial information regarding assets, liabilities, capital, and major funding sources.
Following submission of a resolution plan, the FDIC and Federal Reserve will:
- Release the public section of the resolution plans by close of business on Tuesday, July 3, 2012;
- Preliminarily review the plan for informational completeness within 60 days; and
- Review each plan for its compliance with the requirements of the rule.
This first group of submissions will include Bank of America, Barclays, Citibank, Credit Suisse, Deutsche Bank, Goldman Sachs, JPMorgan Chase, Morgan Stanley and UBS.
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