A new office to consolidate supervision of large, complex banks and systemically important financial institutions is part of an overall effort to strengthen the federal insurer of bank deposits’ work in the areas of supervision and resolution, the agency’s board chairman said Monday.
In a speech Monday in London, Federal Deposit Insurance Corp. (FDIC) Chairman Jelena McWilliams told the Cross Border Resolution & Regulation Colloquium of the Institute of International Finance (IFF)-Bank Policy Institute (BPI) said the establishment of the FDIC’s division of complex institution supervision and resolution would bring together the FDIC’s supervisory and resolution teams to better implement the FDIC’s responsibilities over large, complex banks and systemically important financial institutions. “Aligning these related skills and operations within a single division will improve the FDIC’s coordination, consistency, and accountability in supervising and resolving these institutions,” she said.
She also noted that Monday is the day the eight U.S. “global systemically important banks” (G-SIBs” file their most recent resolution plans, “which as I noted earlier have led to a number of structural and operational changes” at the FDIC.
McWilliams said the FDIC had, in the past, split the responsibilities of the new office (which she noted she announced last week) among three separate divisions and offices. “Though the agency has made real progress under this model, bringing these teams and functions together will simplify our organizational structure, consolidate specialized skill sets, and foster the collaborative, interdisciplinary approach critical to continuing the FDIC’s commitment to world-class supervision and resolution for institutions of any size,” she said.
She asserted the change would also improve the FDIC’s supervision and resolution preparedness by ensuring that information, resources and expertise are shared in advance and readily available in a crisis situation.
The FDIC chairman said that the institutions falling under the purview of the new office (banks with more than $100 billion in assets and other systemic firms for which the FDIC is not the primary regulator) “present unique supervisory and resolution challenges, including responsibility for administering the resolution framework for systemically important financial institutions (SIFIs) under the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank). “This work includes participating in specialized supervisory processes, implementing the 165(d) resolution plan review process for large, complex financial institutions (LCFIs), as well as preparing for and executing a resolution pursuant to the backstop orderly liquidation authority for circumstances when a financial company’s failure in bankruptcy could threaten U.S. financial stability,” McWilliams said.