FDIC invites input on renewing resolution plan requirements for FIs $50 billion and more

A notice seeking comments on renewing resolution plan requirements for federally insured banks and thrifts with $50 billion or more in total assets shows a revised burden estimate that is hundreds of thousands of hours greater than the previous figure.

The plans are required under rules of the Federal Deposit Insurance Corp. (FDIC) that were made final in 2012. While they complement the resolution plan (aka “living will”) requirements for bank holding companies under the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank), these plans are not a Dodd-Frank obligation. Instead, they are implemented under the FDIC’s liquidation and receivership authority under the Federal Deposit Insurance Act.

The FDIC, in its notice for comment, says the plans are “intended to address the continuing exposure of the banking industry to the risks of insolvency of large and complex IDIs [insured depository institutions] that can be mitigated with proper resolution planning.”

The resolution plans, according to the notice, should enable the FDIC, 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 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.”

After the initial submission, plans are to be updated annually unless the FDIC decides to change the submission date.

According to the notice, the FDIC has nearly doubled its annual burden estimate related to these plans, increasing it by 281,305 hours to an aggregate 572,791 hours, but the agency says this is not due to any new requirements. “Rather, it is due to FDIC’s reassessment of the burden hours associated with responding to the existing requirements of the Rule and to guidance, feedback, and additional requests for information by the FDIC as part of the iterative resolution planning process,” the notice states. The FDIC notes it considered feedback received over the past year.

Variations in the implementation of the annual update also have an impact. “Because submissions have been required no more frequently than biennially,” the notice says, “the burden associated with the Annual Update has been multiplied by 2/3 to represent two Annual Update filings over the three-year period contemplated by this notice and renewal.”

The FDIC notice is scheduled for publication in the Federal Register Monday, July 30. With comments due 60 days following F.R. publication, the deadline for comments falls on or around Sept. 28.

Comments are sought on the following:

(a) Whether the collection of information is necessary for the proper performance of the FDIC’s functions, including whether the information has practical utility;

(b) the accuracy of the estimates of the burden of the information collection, including the validity of the methodology and assumptions used;

(c) ways to enhance the quality, utility, and clarity of the information to be collected; and

(d) ways to minimize the burden of the collection of information on respondents, including through the use of automated collection techniques or other forms of information technology.

The FDIC says all comments will become a matter of public record.

Proposed Collection Renewal: Resolution Plans Required for Insured Depository Institutions With $50 Billion or More in Total Assets

FDIC Final Rule (April 1, 2012)