[Federal Register Volume 77, Number 14 (Monday, January 23, 2012)]
[Rules and Regulations]
[Pages 3075-3088]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-1136]
=======================================================================
-----------------------------------------------------------------------
FEDERAL DEPOSIT INSURANCE CORPORATION
12 CFR Part 360
RIN 3064-AD59
Resolution Plans Required for Insured Depository Institutions
With $50 Billion or More in Total Assets
AGENCY: Federal Deposit Insurance Corporation (``FDIC'').
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: The FDIC is adopting this final rule (``Rule'') requiring an
insured depository institution with $50 billion or more in total assets
to submit periodically to the FDIC a contingent plan for the resolution
of such institution in the event of its failure (``Resolution Plan'').
The Rule establishes the requirements for submission and content of a
Resolution Plan, as well as procedures for review by the FDIC. The Rule
requires a covered insured depository institution (``CIDI'') to submit
a Resolution Plan that should enable the FDIC, as receiver, to resolve
the institution under Sections 11 and 13 of the Federal Deposit
Insurance Act (``FDI Act''), 12 U.S.C. 1821 and 1823, 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.
The Rule is intended to address the continuing exposure of the banking
industry to the risks of insolvency of large and complex insured
depository institutions, an exposure that can be mitigated with proper
resolution planning.
The Interim Final Rule, which preceded this Rule, was effective
January 1, 2012,\1\ and remains in effect until superseded by this Rule
on April 1, 2012.
---------------------------------------------------------------------------
\1\ 76 FR 58379 (September 21, 2011).
---------------------------------------------------------------------------
DATES: The Rule is effective April 1, 2012.
FOR FURTHER INFORMATION CONTACT: John F. Simonson, Deputy Director,
Office of Complex Financial Institutions, (202) 898-6681, Hashim
Hamandi, Section Chief, Office of Complex Financial Institutions, (202)
898-6884, Richard T. Aboussie, Associate General Counsel, (703) 562-
2452, David N. Wall, Assistant General Counsel, (703) 562-2440, Mark A.
Thompson, Counsel, (703) 562-2529, Mark G. Flanigan, Counsel, (202)
898-7426, or Shane Kiernan, Senior Attorney, (703) 562-2632.
SUPPLEMENTARY INFORMATION:
I. Background
The FDIC is charged by Congress with the responsibility for
insuring the deposits of banks and thrifts in the United States, and
with serving as receiver of such institutions if those banks and
thrifts should fail. As of September 30, 2011, the FDIC insured
approximately $6.78 trillion in deposits in more than 7,445 depository
institutions. To evaluate potential loss severity and to enable it to
perform its resolution functions most efficiently, the FDIC is
requiring each insured depository institution with $50 billion or more
in total assets to submit periodically to the FDIC a Resolution Plan.
Currently, 37 insured depository institutions are covered by the Rule.
Those institutions held approximately $4.14 trillion in insured
deposits or nearly 61 percent of all insured deposits as of September
30, 2011.
In implementing the deposit insurance program and in efficiently
and effectively resolving failed depository institutions, the FDIC
strengthens the stability of, and helps maintain public confidence in,
the banking system in the United States. In its efforts to achieve this
objective and to implement its insurance and resolution functions, the
FDIC requires a comprehensive understanding of the organization,
operation and business practices of insured depository institutions in
the United States, with particular attention to the nation's largest
and most complex insured depository institutions.
To ensure that the FDIC can effectively carry out these core
responsibilities, the Rule requires a limited number of the largest
insured depository institutions to provide the FDIC with essential
information concerning their structure, operations, business practices,
financial responsibilities and risk exposures. The Rule requires these
institutions to develop and submit detailed plans demonstrating how
such insured depository institutions could be resolved in an orderly
and timely manner in the event of receivership. The Rule also makes a
critically important contribution to the FDIC's implementation of its
statutory receivership responsibilities by providing the FDIC as
receiver with the information it needs to make orderly and cost-
effective resolutions much more feasible. Based upon its experience
resolving failed insured depository institutions (and in particular,
large and complex insured depository institutions), the FDIC has
concluded that Resolution Plans for large and complex insured
depository institutions are essential for their orderly and least-cost
resolution and the development of such plans should begin promptly.
Since the recent financial crisis began in late 2008, financial
authorities throughout the world have recognized and agreed that
advance planning for the resolution of large, complex financial
institutions is critical to minimizing the disruption that a failure
[[Page 3076]]
of such an institution may have as well as the costs of its resolution.
At the 2009 Pittsburgh Summit, and in response to the crisis, the G20
Leaders called on the Financial Stability Board (``FSB'') to propose
possible measures to address the ``too big to fail'' and moral hazard
concerns associated with systemically important financial institutions.
Specifically, the G20 Leaders called for the development of
``internationally consistent firm-specific contingency and resolution
plans.'' The FSB continues its efforts to develop the international
standards for contingency and resolution plans and to evaluate how to
improve the capacity of national authorities to implement orderly
resolutions of large and interconnected financial firms and
periodically reports its progress to the G20 Leaders.\2\
---------------------------------------------------------------------------
\2\ See ``Progress in the Implementation of the G20
Recommendations for Strengthening Financial Stability'' Reports of
the Financial Stability Board to G20 Finance Ministers and Central
Bank Governors dated February 15, 2011, and April 10, 2011.
---------------------------------------------------------------------------
The FSB's program has built on work undertaken by the Basel
Committee on Banking Supervision's Cross-border Bank Resolution Group,
co-chaired by the FDIC, since 2007. In its final Report and
Recommendations of the Crossborder Bank Resolution Group, issued on
March 18, 2010, the Basel Committee emphasized the importance of
preplanning and the development of practical and credible plans to
promote resiliency in periods of severe financial distress and to
facilitate a rapid resolution should that be necessary. In its review
of the financial crisis, the Report found that one of the main lessons
was that the complexity and interconnectedness of large financial
conglomerates made crisis management and resolutions more difficult and
unpredictable.
Similarly, the FSB's Principles for Cross-Border Cooperation on
Crisis Management commit national authorities to ensure that firms
develop adequate contingency plans, including information regarding
group structure, and legal, financial and operational intra-group
dependencies; the interlinkages between the firms and financial system
(e.g., in markets and infrastructures) in each jurisdiction in which
they operate; and potential impediments to a coordinated solution
stemming from the legal frameworks and bank resolution procedures of
the countries in which the firm operates. The FSB Crisis Management
Working Group has recommended that supervisors ensure that firms are
capable of supplying in a timely fashion the information that may be
required by the authorities in managing a financial crisis. The FSB
recommendations strongly encourage firms to maintain contingency plans
and procedures for use in a resolution situation (e.g., factsheets that
could easily be used by insolvency practitioners), and to review them
regularly to ensure that they remain accurate and adequate. On July 19,
2011, the FSB issued a public consultation on proposed measures to
address systemic risk and moral hazard posed by systemically important
financial institutions, which includes proposed measures for improved
resolution planning by firms and authorities.\3\ The Rule supports and
complements these international efforts.
---------------------------------------------------------------------------
\3\ See Financial Stability Board, ``Consultative Document:
Effective Resolution of Systemically Important Financial
Institutions--Recommendations and Timelines,'' 17 (July 19, 2011),
available at http://www.financialstabilityboard.org/publications/r_110719.pdf (``An adequate, credible [recovery and resolution plan]
should be required for any firm that is assessed by its home
authority to have a potential impact on financial stability.'')
Annex 5 of the Consultative Document sets out a comprehensive
proposed framework and content for such plans.
---------------------------------------------------------------------------
In addition, Section 165(d) of the Dodd-Frank Wall Street Reform
and Consumer Protection Act (the ``Dodd- Frank Act''), 12 U.S.C.
5365(d), adopted July 21, 2010, mandates that each covered company
periodically submit to the Board of Governors of the Federal Reserve
System (``FRB''), the Financial Stability Oversight Council, and the
FDIC the plan of such company for rapid and orderly resolution under
the Bankruptcy Code in the event of material financial distress or
failure (``DFA Resolution Plan''). This requirement applies to each
nonbank financial company subjected to supervision by the Federal
Reserve Board under Title I of the Dodd-Frank Act and each bank holding
company with assets of $50 billion or more, including foreign bank
holding companies with U.S. financial operations.
The Rule is intended to complement the resolution plan requirements
of the Dodd-Frank Act. The Rule requires each insured depository
institution with $50 billion or more in total assets to submit
periodically to the FDIC a contingent plan for the resolution by the
FDIC, as receiver, of such institution under the Federal Deposit
Insurance Act (``FDI Act'') in the event of the institution's failure.
Currently, with the exception of three thrifts covered by the Rule,
holding companies of each insured depository institution covered by the
Rule are expected to file a DFA Resolution Plan. While a DFA Resolution
Plan will describe the plan to resolve each parent holding company
under the Bankruptcy Code, the Rule is focused on planning the
resolution of the subsidiary insured depository institution, a
resolution that will not be conducted under the Bankruptcy Code, but
rather will be conducted under the receivership and liquidation
provisions of the FDI Act.\4\ The Rule sets forth the elements that are
expected to be included in an insured depository institution's
Resolution Plan. The requirements for DFA Resolution Plans are provided
in FRB and FDIC regulations relating thereto (``Section 165(d)
rule'').\5\
---------------------------------------------------------------------------
\4\ Sections 11 and 13 of the FDI Act, 12 U.S.C. 1821 and 1823.
\5\ See FRB and FDIC Final Rule: Resolution Plans Required, 76
FR 67323 (November 1, 2011).
---------------------------------------------------------------------------
The FDI Act gives the FDIC broad authority to carry out its
statutory responsibilities, and to obtain the information required by
the Rule. The FDIC's roles as insurer and receiver require a distinct
focus on potential loss severities, default risks, complexities in
structure and operations, and other factors that impact risk to the
Deposit Insurance Fund and the ability of the FDIC to conduct an
orderly resolution. The authority to issue the Rule is provided by
Section 9(a) Tenth of the FDI Act, 12 U.S.C. 1819(a) Tenth, which
authorizes the FDIC to prescribe, by its Board of Directors, such rules
and regulations as it may deem necessary to carry out the provisions of
the FDI Act or of any other law that the FDIC is responsible for
administering or enforcing. The FDIC also has authority to adopt
regulations governing the operations of its receiverships pursuant to
Section 11(d)(1) of the FDI Act. 12 U.S.C. 1821(d)(1). Collection of
the information required by the Rule is also supported by the FDIC's
broad authority to conduct examinations of depository institutions to
determine the condition of the insured depository institution,
including special examinations, 12 U.S.C 1820(b)(3).
II. Interim Final Rule: Summary of Comments
The FDIC originally proposed the resolution plan rule through a
Notice of Proposed Rulemaking (``NPR'') published in the Federal
Register on May 17, 2010.\6\ The NPR solicited public comment on all
aspects of the NPR. The comment period ended on July 16, 2010, and
eight comments were received. On September 21, 2011, the
[[Page 3077]]
FDIC caused to be published in the Federal Register an Interim Final
Rule (the ``IFR'').\7\ The FDIC invited public comment on all aspects
of the IFR and posed specific questions to the public regarding the
scope of coverage, definitions of terms used in the IFR, strategic
analysis, governance, informational elements and process. The comment
period ended on November 21, 2011.
---------------------------------------------------------------------------
\6\ 75 FR 27464, entitled '' Special Reporting, Analysis and
Contingent Resolution Plans at Certain Large Depository
Institutions'' (the ``Proposed Rule'').
\7\ 76 FR 58379.
---------------------------------------------------------------------------
The FDIC received seven comment letters from individuals and
banking organizations, as well as industry and trade groups
representing the banking, insurance and financial services industry.
Six of these comments specifically address provisions of the IFR. The
comment letters generally expressed support for the broader goals of
the IFR to require CIDIs to provide the FDIC with essential information
concerning their structure, operations, business practices, financial
responsibilities and risk exposures, and to develop and submit detailed
plans demonstrating how such insured depository institutions could be
resolved under the FDI Act in an orderly and timely manner in the event
of receivership. Some comment letters expressed concern that the IFR
did not conform closely enough with the Section 165(d) rule, and others
suggested that the Rule more specifically describe certain information
that a CIDI must provide. By and large, the comments received fit
within several of the categories of questions posed by the FDIC to the
public in the IFR. One comment addressed the FDIC's burden estimate.
These comments are summarized below.
Scope
The IFR requires each insured depository institution with $50
billion or more in total assets to submit periodically to the FDIC a
plan for the resolution of such institution in the event of its
failure. The $50 billion in asset threshold was an increase from the
$10 billion in asset threshold proposed in the NPR although the NPR
also required the CIDI to be owned by a holding company with $100
billion or more in assets. One commenter agreed that only insured
depository institutions with $50 billion or more in assets should be
subject to the Rule while those insured depository institutions with
less than $50 billion in assets should not be because their holding
company structures and affiliate relationships are simple enough that
they would not impede resolution under the FDI Act.
Another commenter advocated a coverage threshold using the
aggregate assets of all consolidating and non-consolidating entities in
the holding company group in order to mitigate the risk that assets are
allocated among smaller entities to avoid being subject to the Rule.
This commenter suggested that an insured depository institution should
be covered if the group's aggregate assets exceed $50 billion.
One commenter was critical of the inclusion of savings association
subsidiaries of savings and loan holding companies because savings
associations typically focus on consumer and retail lending rather than
commercial banking and do not present the complexity and the kind of
threat to the deposit insurance fund or financial system that the Rule
attempts to address. This commenter suggests that the rule should be
imposed only on savings associations in financial distress, if other
factors present a threat to the deposit insurance fund or the economy,
or if the parent company has been designated as a systemically
important financial institution by the Financial Stability Oversight
Council; or, alternatively, only if the savings association is over $50
billion and receives a CAMELS rating of 3 or worse or its parent
receives an equivalent low rating. Additionally, this commenter
suggests that the FDIC modify the Rule in a manner that would base a
subsidiary insured depository institution's duty to file a Resolution
Plan upon the requirement that the subsidiary's parent financial
company file a DFA Resolution Plan.
Strategic Analysis
With respect to strategic analysis, one commenter suggested that
the FDIC consider a recapitalization of a CIDI as an alternative to
traditional resolution methods, believing that such a strategy would be
more effective during financial panic than would be a liquidation of
assets or sale to a third party pursuant to a traditional purchase and
assumption agreement. The same commenter recommended eliminating the
requirement that the CIDI demonstrate the resolution strategy as
``least-costly'' because only the FDIC can make such a determination
and it does not have to be made until failure. Further, according to
this commenter, a requirement that the CIDI demonstrate that the
strategy is least costly dissuades the CIDI from considering other
resolution strategies as only one strategy could be ``least-cost.''
The IFR requires that a Resolution Plan provide a detailed
description of the processes the CIDI employs for assessing the
feasibility of the plan under idiosyncratic and industry-wide stress
scenarios. One commenter requests clarification of this terminology in
light of the requirement that the Resolution Plan strategies should
take into account that the failure of the CIDI may occur under
baseline, adverse and severely adverse economic conditions. This
commenter believes that the Rule's reference to ``idiosyncratic and
industry-wide stress scenarios'' be deleted to avoid internal
inconsistency and to better harmonize the relevant provisions of the
Rule.
Another commenter suggests that the Rule take into account the
differences among organizations and the range of strategies that each
may consider. This commenter requests that less complex institutions be
given the ability to submit streamlined Resolution Plans tailored to
nature and risk profile of the CIDI.
The IFR allows a CIDI to submit its initial Resolution Plan
assuming the baseline conditions only, or, if a baseline scenario is
not then available, a reasonable substitute developed by the CIDI. One
commenter believes that the FDIC should not allow a CIDI to submit its
initial Resolution Plan assuming the baseline conditions only and
recommends that CIDIs be required to assume adverse and severely
adverse economic conditions for their initial Resolution Plans in order
to increase confidence in, and the integrity of, the resolution
planning process.
One commenter recommends adopting language directing CIDIs to
identify and discuss ``potential barriers to effective resolution and
actions to mitigate these'' in order to conform to the FSB's key
attributes of effective resolution regimes for financial institutions.
Governance
One commenter suggests that the Rule clearly permit a committee,
rather than a single ``senior management official,'' to be responsible
for development, maintenance, implementation and filing of the
Resolution Plan. This commenter suggests that the Rule clarify that it
would be appropriate for the CIDI to divide such responsibilities among
multiple senior management officials or assign them to a committee, and
points out that the Section 165(d) rule recognizes that the
responsibility need not be vested in an individual by referring to
``senior management official(s)'' responsible for resolution planning.
[[Page 3078]]
Informational Elements
The IFR sets forth a number of informational elements that a CIDI
should include in its plan. One commenter notes that the IFR required a
description of material effects that any material event may have on the
Resolution Plan and summary of changes that are required to the
Resolution Plan, whereas the Section 165(d) rule only requires an
explanation of why the event may require changes. This commenter
recommends that the FDIC not require more detailed information with the
notice of material events than would be required under the Section
165(d) rule.
The IFR requires identification in the Resolution Plan of each
payment, clearing and settlement system of which a CIDI is a member. A
commenter suggests that the Rule require identification of ``material''
payment, clearing and settlement systems, and recommends that the Rule
be conformed to the Section 165(d) rule, which limits disclosure to
systems on which a covered company conducts a material number or value
amount of trades or transactions.
The same commenter recommends that the Rule qualify the common or
shared personnel, facilities, or systems requirements so that the
Resolution Plan only need identify ``key'' common or shared personnel,
facilities, or systems. This commenter argues that, without a
qualifier, the Rule would require exhaustive lists of personnel and
systems that would be of little practical use to the FDIC. The
commenter points out the limitation of the scope of a parallel
informational requirement in the Section 165(d) rule, which requires
identification of interconnections and interdependencies that, if
disrupted, would materially affect funding or operations.
This commenter also requests that the requirement to describe non-
U.S. components of the CIDI's structure and operations be limited to
material or key components because it believes it would be more useful
to focus on the assets, operations, interrelationships and exposures
that are material to the resolution of the CIDI.
Another commenter thought that the IFR overlooks contingent
liabilities for correspondent banking and unfunded lending commitments
to government subdivisions and social service agencies. This commenter
believes that these entities would suffer if CIDI fails and the
receiver repudiates its funding obligation, and such action could lead
to public panic or distrust in the event that the agency is unable to
find another source of liquidity. This commenter suggests that the
reporting of unfunded commitments would enable FDIC to develop an
action plan to mitigate the adverse effects resulting from the
cessation of funding.
Process
The IFR requires a CIDI to demonstrate its capability to promptly
produce the information and data underlying its plan in a format
acceptable to the FDIC. One commenter believes that this requirement
would be better addressed through the FDIC's ongoing review of
Resolution Plans than through a rule-based requirement, and points out
how the Section 165(d) rule eliminated a similar data-production
requirement in favor of a supervisory approach. This commenter also
states that informational requirements are being developed and data
capabilities are evolving, and such improvement and evolution should be
part of the supervisory process.
One commenter points out several date discrepancies between the IFR
and the Section 165(d) rule. First, there is a difference in effective
dates between the IFR, which is effective on January 1, 2012, and the
Section 165(d) rule, which is effective on November 30, 2011. The
commenter believes that the measurement date should be the same to
ensure that any company subject to the Section 165(d) rule and any of
its subsidiary insured depository institutions subject to the Rule will
have the same initial and subsequent Resolution Plan submission dates.
A change in size during the gap between effective dates could result in
Resolution Plans under the two rules being due on different dates.
Second, there is a discrepancy between the plan submission dates for an
insured depository institution that becomes subject to the IFR after
its effective date and a company that becomes subject to the Section
165(d) rule after its effective date. Under the Section 165(d) rule, a
company that becomes covered after the effective date must submit its
initial plan by July 1 of the following year, provided that July 1 of
the following year is at least 270 days after the date on which the
company becomes covered. Under the IFR, an insured depository
institution that that becomes covered after the effective date must
submit its initial plan by July 1 of the following year, without any
proviso ensuring that the CIDI have 270 days from the date it becomes
covered to submit its plan. The commenter urges the FDIC to add a
similar proviso to the Rule to ensure consistency between the rules and
to avoid the potential for different submission dates for a company
subject to the Section 165(d) rule and its CIDI subsidiary. Third, it
is possible that an insured depository institution that becomes a CIDI
after the effective date could have a different initial submission date
than if it had been covered as of the effective date because it would
presumably have to file on July 1 of the following year, rather than in
accordance with the staggered schedule. The commenter suggests that the
FDIC use its discretionary authority to permit a new CIDI additional
time to submit its initial plan in these circumstances to avoid
differential treatment of similarly situated insured depository
institutions.
One commenter points out that, under both the IFR and the Section
165(d) rule, CIDIs and covered companies are required to file a notice
within 45 days of any event, occurrence, change in conditions or
circumstances or other change that results in, or could reasonably be
foreseen to have, a material effect on the Resolution Plan. The Section
165(d) rule provides that such notice is not required if the date by
which the notice must be submitted is within 90 days of the annual
Resolution Plan submission date, while the IFR only provides a 45-day
window. The commenter requests that the two requirements be conformed.
A commenter suggests the Rule provide that the FDIC will consult
with the appropriate federal banking agency for the CIDI and its parent
company before determining that a Resolution Plan is not credible. This
commenter also suggests that the Rule provide that the FDIC will
consult with the appropriate foreign supervisors, including the
relevant home-country supervisor for the foreign-based parent of the
CIDI, before issuing any notice of deficiencies, imposing any
requirements or restrictions, or taking any other similar remedial
action.
One commenter states that, in determining whether a Resolution Plan
is credible, the FDIC should consider whether the resolution strategy
envisions breaking the entity into subcomponents for sale. This
commenter believes that any Resolution Plan that excludes breakup as an
option only perpetuates the risk that the Rule intends to mitigate.
Burden
One commenter states that the burden on CIDIs whose parent company
is not required to file a Resolution Plan under the Section 165(d) rule
could be significant and likely exceeds the FDIC's published estimate.
Although this commenter does not provide a specific
[[Page 3079]]
burden estimate, it anticipates that the resources required to produce
a Resolution Plan is several times the FDIC's 7,200 hours estimate. The
commenter believes the FDIC's estimate may be accurate for CIDIs, whose
parent is filing a DFA Resolution Plan, but it does not account for the
additional burden on savings associations whose parent would not be
filing a DFA Resolution Plan.
The FDIC has carefully considered the comments and has made
appropriate revisions to the Rule as described below.
III. Section-by-Section Analysis of Rule
Definitions. Section 360.10(b) defines certain terms, including
``core business lines,'' ``critical services,'' ``covered insured
depository institution,'' ``parent company,'' ``parent company
affiliate'' and ``material entity,'' which are key definitions in the
Rule.
``Core business lines'' means those business lines of the CIDI,
including associated operations, services, functions and support that,
in the view of the CIDI, upon failure would result in a material loss
of revenue, profit, or franchise value. The core business lines of the
CIDI are valuable assets of the CIDI. The Resolution Plan should
provide a strategy for the sale of the core business lines. The Section
165(d) rule contains a similar definition but, for the Section 165(d)
rule the core business lines are determined from the perspective of the
covered company rather than the CIDI. For example, the CIDI may be
providing services to its holding company, such as payment services,
that support a business line of its holding company, such as a
brokerage service, that is not a core business line of the CIDI. In
such example, payment services may be identified as a core business
line of the CIDI, while its holding company identifies brokerage
services as a business line in its DFA Resolution Plan.
``Covered insured depository institution'' means an insured
depository institution with $50 billion or more in total assets, as
determined based upon the average of the institution's four most recent
Reports of Condition and Income or Thrift Financial Reports, as
applicable to the insured depository institution. Although several
commenters requested changes in the scope of insured depository
institutions covered by the Rule, after consideration of those
comments, the Rule has not been amended. The FDIC needs the information
required by the Rule before an institution is in financial distress.
The purpose of the Rule is to enable the FDIC to perform its resolution
functions most efficiently through extensive planning in cooperation
with the CIDI and to enhance its ability to evaluate potential loss
severity if an institution fails. History instructs us that the
financial condition of a large institution can deteriorate rapidly, and
such deterioration is exacerbated in illiquid markets. Additionally,
requiring all insured depository institutions of significant size to
focus on resolution planning will focus attention on hidden or nascent
deficiencies that healthy institutions may have.
``Critical Services'' means services and operations of the CIDI,
such as servicing, information technology support and operations, human
resources and personnel that are necessary to continue the day-to-day
operation of the CIDI. The Resolution Plan should provide for the
continuation and funding of critical services. For clarity and to avoid
confusion, the term ``critical services'' differs substantially from
the term ``critical operations'' as used in the Section 165(d) rule.
The term ``critical operations'' is used to designate operations of a
covered company the discontinuation of which would pose a threat to the
financial stability of the United States. In contrast, the term
``critical services'' is used in the Rule to mean those functions that
must be kept operational during the resolution process to allow the
receiver to conduct the resolution in an orderly and efficient manner.
``Parent company'' means the company that controls, directly or
indirectly, an insured depository institution. In a multi-tiered
holding company structure, parent company means the top-tier of the
multi-tiered holding company only.
``Parent company affiliate'' means any affiliate of the parent
company other than the CIDI and subsidiaries of the CIDI. The term is
used in identifying the exposures or reliance that the CIDI has on
entities in its affiliated group that are not owned or otherwise
controlled by the CIDI. In a multi-tier holding company structure, the
term includes all holding companies of the CIDI (except the top-tier
holding company) and their affiliates (other than the top-tier holding
company, the CIDI and subsidiaries of the CIDI).
``Material entity'' means a company that is significant to the
activities of a critical service or core business line. For example,
the legal entity utilized by the CIDI as the contracting entity for a
core business line would be a material entity. Also, a subsidiary of
the CIDI that provides a critical service would be a material entity.
Resolution Plans to be submitted by the CIDI to the FDIC. Pursuant
to Section 360.10(c), the initial filings will be staggered to
correspond to the schedule of filings by parent companies under the
Section 165(d) rule. This schedule also allows the FDIC to focus on the
most complex or largest institutions first. In response to comments on
the IFR, the date for calculating total nonbank assets in the Rule has
been change to November 30, 2011. The Rule requires the first filing
group, which consists of each CIDI whose parent company, as of November
30, 2011, had $250 billion or more in total nonbank assets (or in the
case of a parent company that is a foreign-based company, such
company's total U.S. nonbank assets), to file their initial Resolution
Plans on July 1, 2012. The Rule requires the second filing group, which
consists of each CIDI not included in the first group whose parent
company, as of November 30, 2011, had $100 billion or more in total
nonbank assets (or, in the case of a parent company that is a foreign-
based company, such company's total U.S. nonbank assets) to file their
initial Resolution Plans on or before July 1, 2013. The Rule requires
the third filing group, which consists of the remaining CIDIs, to file
their initial Resolution Plans on or before December 31, 2013. The Rule
also provides that, on a case-by-case basis, the FDIC may extend, upon
request, the implementation and updating time frames of the Rule.
After the initial Resolution Plan is submitted, each CIDI is
required to submit a new Resolution Plan annually on or before the
anniversary date of the date for the submission of its initial plan.
With respect to an insured depository institution that becomes a
CIDI after the effective date of the Rule and in response to comments,
the Rule was revised to coincide with the Section 165(d) rule's filing
requirement for such an institution's parent. The Rule provides that an
insured depository institution that becomes a CIDI after the effective
date of the Rule shall submit its initial Resolution Plan no later than
the next July 1 following the date the insured depository institution
becomes a CIDI, provided such date occurs no earlier than 270 days
after the date on which the insured depository institution became a
CIDI.
A CIDI is required to file a notice no later than 45 days after any
event, occurrence, change in conditions or circumstances or change
which results in, or could reasonably be foreseen to
[[Page 3080]]
have, a material effect on the Resolution Plan of the CIDI. The FDIC
desires a notice only when an event results in, or could reasonably be
foreseen to have, a material effect on the Resolution Plan of the CIDI
such that the Resolution Plan would be ineffective or require material
amendment to be effective. A notice is not required if an event does
not result in, or could not reasonably be foreseen to have, a material
effect on the Resolution Plan of the CIDI. In regard to what
constitutes a material effect on the Resolution Plan, the effect on the
Resolution Plan should be of such significance as to render the
Resolution Plan ineffective, in whole or in part, until an update is
made to the plan. A notice should describe the event, occurrence or
change and explain why the event, occurrence or change may require
changes to the resolution plan. One commenter noted that the IFR
provision regarding notice of material event varied from the similar
provision in the Section 165(d) rule and requested that the Rule be
modified to be consistent with the Section 165(d) rule. The Rule has
been modified to be consistent with the Section 165(d) rule with
respect to both the content of the notice and the exception, i.e.,
under the Rule, a CIDI is not required to file a notice of material
event within 90 days prior to the date on which it is required to file
its annual resolution plan.
Incorporation of data and other information from a Dodd-Frank Act
resolution plan. The CIDI may incorporate data and other information
from a DFA Resolution Plan filed by its parent company.
Content of the Resolution Plan. Section 360.10(c)(2) requires each
CIDI to submit a Resolution Plan that should enable the FDIC to resolve
the CIDI in the event of its insolvency under the FDI Act 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 realized by the creditors in the
resolution in accordance with Sections 11 and 13 of the FDI Act, 12
U.S.C. 1821 and 1823, and specifies the minimum content of the
Resolution Plan. The Resolution Plan strategies should take into
account that failure of the CIDI may occur under the baseline, adverse
and severely adverse economic conditions developed by the FRB pursuant
to 12 U.S.C. 5365(i)(1)(B); provided, however, a CIDI may submit its
initial Resolution Plan assuming the baseline conditions only, or, if a
baseline scenario is not then available, a reasonable substitute
developed by the CIDI. While one commenter suggested that a CIDI's
first iteration of a Resolution Plan should assume a baseline, adverse
and severely adverse economic conditions, the FDIC recognizes the
burden that the Rule imposes on CIDIs and the challenge that CIDIs face
in preparing their initial Resolution Plans. To reduce this burden, the
FDIC is requiring that feasibility for initial Resolution Plans be
assessed under only baseline economic condition scenarios. Subsequent
Resolution Plans must assess feasibility under adverse and severely
adverse economic condition scenarios as well.
The Resolution Plan should include an executive summary that
summarizes the key elements of the CIDI's strategic plan for resolution
under the FDI Act in the event of its insolvency. After the CIDI files
its initial plan, each annual Resolution Plan should also describe
material events, such as acquisitions, sales, litigation and
operational changes, since the most recently filed plan that may have a
material effect on the plan, material changes to the CIDI's Resolution
Plan from its most recently filed plan, and any actions taken by the
CIDI since filing of the previous plan to improve the effectiveness of
its Resolution Plan or remediate or otherwise mitigate any material
weaknesses or impediments to the effective and timely execution of the
Resolution Plan.
The Resolution Plan should provide the CIDI's, parent company's,
and affiliates' legal and functional structures and identify core
business lines. A mapping of core business lines, including material
asset holdings and liabilities related thereto, to material entities
should be provided that identifies which legal entities are utilized in
the conduct of such business line. The Resolution Plan should include a
discussion of the CIDI's overall deposit activities including, among
other things, unique aspects of the deposit base or underlying systems
that may create operational complexity for the FDIC or result in
extraordinary resolution expenses in the event of failure and a
description of the branch organization, both domestic and foreign. Key
personnel tasked with managing core business lines and deposit
activities and the CIDI's branch organization should be identified.
The Resolution Plan should identify critical services and providers
of critical services. A mapping of critical services to material
entities and core business lines should be provided that identifies
which legal entities are providing the critical services and which
business lines are utilizing the critical services. The Resolution Plan
should describe the CIDI's strategy for continuing critical services in
the event of the CIDI's failure. When critical services are provided by
the parent company or a parent company affiliate, the Resolution Plan
should describe the CIDI's strategy for continuing critical services in
the event of the parent company's or parent company affiliate's
failure. The ability of each parent company affiliate providing
critical services to function on a stand-alone basis in the event of
the parent company's failure should be assessed.
The Resolution Plan should identify the elements or aspects of the
parent company's organizational structure, the interconnectedness of
its legal entities, the structure of legal or contractual arrangements,
or its overall business operations that would, in the event the CIDI
were placed in receivership, diminish the CIDI's franchise value,
obstruct its continued business operations or increase the operational
complexity to the FDIC of resolution of the CIDI. One commenter
suggested that the Rule require the CIDI to identify potential barriers
or other obstacles to an orderly resolution of the CIDI. The Rule now
provides that the CIDI identify potential barriers or other material
obstacles to an orderly resolution of the CIDI, interconnections and
inter-dependencies that hinder the timely and effective resolution of
the CIDI, and include the remediation steps or mitigating responses
necessary to eliminate or minimize such barriers or obstacles.
The Resolution Plan should provide a strategy to unwind or separate
the CIDI and its subsidiaries from the organizational structure of its
parent company in a cost-effective and timely fashion. The Resolution
Plan should also describe remediation or mitigating steps that can be
taken to eliminate or mitigate obstacles to such separation.
The Resolution Plan should provide a strategy for the sale or
disposition of the deposit franchise, including branches, core business
lines and major assets of the CIDI 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 such assets and minimizes the
amount of any loss realized in the resolution of cases. The Resolution
Plan should also describe how the strategies for the separation of the
CIDI and its subsidiaries from its
[[Page 3081]]
parent company's organization and sale or disposition of deposit
franchise, core business lines and major assets can be demonstrated to
be the least costly to the Deposit Insurance Fund of all possible
methods for resolving the CIDI as required by Section 13(c)(4)(A) of
the FDI Act, 12 U.S.C. 1823(c)(4)(A). One commenter suggested that the
Rule should not require the CIDI to demonstrate a strategy is least
costly ex ante. The Rules requires the CIDI to propose reasonable
resolution options and demonstrate how one is least costly relative to
liquidation or other resolution methods. A CIDI can demonstrate a
selected strategy is least costly by offering a range of transactions
and be ensuring that the transactions are offered broadly to the
market, competitive bids are taken and bids are evaluated carefully.
The CIDI can apply those strategies, or others it may develop, for
demonstrating that the option ultimately selected will be least costly.
Among potential strategies for the payment of depositors that
should be considered are: (a) A cash payment of insured deposits,\8\
(b) a purchase and assumption transaction with an insured depository
institution to assume insured deposits, (c) a purchase and assumption
transaction with an insured depository institution to assume all
deposits, (d) a purchase and assumption transaction with multiple
insured depository institutions in which branches are broken up and
sold separately in order to maximize franchise value, and (e) transfer
of insured deposits to a bridge institution chartered to assume such
deposits, as an interim step prior to the purchase of the deposit
franchise and assumption of such deposits by one or more insured
depository institutions.\9\
---------------------------------------------------------------------------
\8\ This task could be accomplished through the exercise of
FDIC's authority to temporarily operate a new depository institution
under Section 11(m) of the FDI Act, 12 U.S.C. 1821(m).
\9\ A bridge depository institution is a new, temporary, full-
service insured depository institution controlled by the FDIC. It is
designed to ``bridge'' the gap between the failure of an insured
depository institution and the time when the FDIC can implement a
satisfactory acquisition by a third party. Section 11(n) of the FDI
Act, 12 U.S.C. 1821(n).
---------------------------------------------------------------------------
Among potential strategies for the sale of core business lines and
assets that should be considered are: (a) Retention of some or all of
the assets in receivership, to be marketed broadly to eligible
purchasers, including insured depository institutions as well as other
interested purchasers, (b) sale of all or a portion of the core
business lines and assets in a purchase and assumption agreement, to
one or more insured depository institutions, and (c) transfer of all or
a portion of the core business lines and assets to a bridge institution
chartered to continue operating the core business lines and service the
assets transferred to it, as an interim step prior to the sale of such
core business lines and assets through appropriate marketing
strategies.\10\
---------------------------------------------------------------------------
\10\ One significant benefit of using the bridge depository
institution relates to qualified financial contracts. Qualified
financial contracts are not subject to either the ipso facto rule or
the 90-day stay on enforcement of contracts in default. However, the
FDI Act precludes a counterparty from terminating a qualified
financial contract solely by reason of the appointment of a receiver
for a insured depository institution (a) until 5 p.m. (Eastern time)
on the business day following the date of appointment; or (b) after
the counterparty has received notice that the contract has been
transferred to a solvent financial institution, including a bridge
insured depository institution.
---------------------------------------------------------------------------
In developing a resolution strategy, each CIDI may utilize one or
more of the methods described above, but is not limited to these
methods. As suggested by one commenter, a CIDI may consider a post-
appointment recapitalization in its Resolution Plan and a CIDI should
address this option if it believes a recapitalization would be among
the resolution options that are least costly to the deposit insurance
fund. Another commenter suggested a breakup of an institution should
also be considered. A breakup is a legitimate resolution method and a
CIDI may consider that as a resolution option. The resolution strategy
should be tailored to the size, complexity and risk profile of the
institution.
In addition to the strategic analyses described above, the
Resolution Plan should provide a detailed description of the processes
the CIDI employs for determining the current market values and
marketability of core business lines and material asset holdings,
assessing the feasibility of the CIDI's plans, under baseline, adverse
and severely adverse economic condition scenarios for executing any
sales, divestitures, restructurings, recapitalizations, or similar
actions contemplated in the Resolution Plan, and assessing the impact
of any sales, divestitures, restructurings, recapitalizations, or other
similar actions on the value, funding and operations of the CIDI and
its core business lines. This information will allow the FDIC to
understand the basis for the valuations included in the Resolution Plan
and to consider how those processes could be utilized in a resolution.
Major counterparties should be identified. The CIDI should describe
the interconnections, interdependencies and relationships with such
major counterparties and analyze whether the failure of each major
counterparty would likely have an adverse impact on or result in the
material financial distress or failure of the CIDI. The Resolution Plan
should describe any material off-balance-sheet exposures (including
unfunded commitments, guarantees and contractual obligations) of the
CIDI and those exposures should be mapped to core business lines.
The Resolution Plan should identify and describe processes used by
the CIDI to determine to whom the CIDI has pledged collateral, identify
the person or entity that holds such collateral, and identify the
jurisdiction in which the collateral is located; and if different, the
jurisdiction in which the security interest in the collateral is
enforceable against the CIDI.
The Resolution Plan should describe the practices of the CIDI and
its core business lines related to the booking of trading and
derivative activities. Each system on which the CIDI conducts a
material number or value amount of trades should be identified. Each
trading system should be mapped to the CIDI's legal entities and core
business lines. The Resolution Plan should identify material hedges of
the CIDI and its core business lines related to trading and derivative
activities, including a mapping to legal entity. Hedging strategies of
the CIDI should be described.
An unconsolidated balance sheet for the CIDI and a consolidating
schedule for all material entities that are subject to consolidation
with the CIDI should be provided. Amounts attributed to entities that
are not material may be aggregated on the consolidating schedule.
Financial statements for material entities should be provided. When
available, audited financial statements should be provided.
The Resolution Plan should identify each payment, clearing and
settlement system of which the CIDI, directly or indirectly, is a
member. Membership in each such system should be mapped to the CIDI's
legal entities and core business lines. Systems that are immaterial in
resolution planning, such as a local check clearing house, do not need
to be identified.
The Resolution Plan should provide detailed descriptions of the
funding, liquidity and capital needs of, and resources available to,
the CIDI and its material entities, which should be mapped to core
business lines and critical services. The Resolution Plan should also
describe the material components of the liabilities of the CIDI and its
material entities and identify types and amounts of short-term and
long-term liabilities by type and term to
[[Page 3082]]
maturity, secured and unsecured liabilities and subordinated
liabilities.
The Resolution Plan should describe any material affiliate funding
relationships, accounts, and exposures, including terms, purpose, and
duration, that the CIDI and any of its subsidiaries have with its
parent or any parent company affiliate. All material affiliate
financial exposures, claims or liens, lending or borrowing lines and
relationships, guaranties, asset accounts, deposits, or derivatives
transactions should be described. The description should clearly
identify the nature and extent to which parent company or parent
company affiliates serve as a source of funding to the CIDI, the terms
of any contractual arrangements, including any capital maintenance
agreements, the location of related assets, funds or deposits and the
mechanisms by which funds can be downstreamed from the parent company
to the CIDI and its subsidiaries.
The Resolution Plan should describe systemically important
functions that the CIDI, its subsidiaries and affiliates provide,
including the nature and extent of the institution's involvement in
payment systems, custodial or clearing operations, large sweep
programs, and capital markets operations in which it plays a dominant
role. Critical vulnerabilities, estimated exposure and potential
losses, and why certain attributes of the businesses detailed in
previous sections could pose a systemic risk to the broader economy
should be discussed.
The Resolution Plan should describe material components of the
CIDI's structure that are based or located outside the United States,
including foreign branches, subsidiaries and offices. Details should be
provided on the location and amount of foreign deposits and assets. The
Resolution Plan should discuss the nature and extent of the CIDI's
cross-border assets, operations, interrelationships and exposures which
should be mapped to legal entities and core business lines.
The Resolution Plan should provide a detailed inventory and
description of the key management information systems and applications,
including systems and applications for risk management, accounting, and
financial and regulatory reporting, used by the CIDI and its
subsidiaries. The legal owner or licensor of the systems should be
identified. The use and function of the system or application should be
described. A listing of service level agreements and any software and
systems licenses or associated intellectual property related thereto
should be provided. Any disaster recovery or other backup plans should
be identified and described. The Resolution Plan should identify common
or shared facilities and systems as well as personnel necessary to
operate such facilities and systems. Personnel may be identified by a
department name or other identifier (for example, the accounting
department personnel) when the names of such personnel are retrievable,
upon request, using such identifier. The Resolution Plan should also
describe the capabilities of the CIDI's processes and systems to
collect, maintain, and report the information and other data underlying
the Resolution Plan to management of the CIDI and, upon request to the
FDIC. Furthermore, the Resolution Plan should describe any
deficiencies, gaps or weaknesses in such capabilities and the actions
the CIDI intends to take to promptly address such deficiencies, gaps,
or weaknesses, and the time frame for implementing such actions.
The Resolution Plan should include a detailed description of how
resolution planning is integrated into the corporate governance
structure and processes of the CIDI, the CIDI's policies, procedures,
and internal controls governing preparation and approval of the
Resolution Plan, and the identity and position of the senior management
official of the CIDI who is primarily responsible and accountable for
the development, maintenance, implementation, and filing of the
Resolution Plan and for the CIDI's compliance with this section. One
commenter suggested that the Rule be modified to make clear that it
would be appropriate if a CIDI were to divide responsibilities among
multiple senior management officials or assign them to a committee.
While it may be appropriate to divide up the responsibilities, to
assure appropriate oversight, the primary responsibility and
accountability for the development, maintenance, implementation, and
filing of the Resolution Plan and for the CIDI's compliance with this
section should be assigned to one senior management official.
The Resolution Plan should describe the nature, extent, and results
of any contingency planning or similar exercise conducted by the CIDI
since the date of the most recently filed Resolution Plan to assess the
viability of or improve the Resolution Plan.
The Resolution Plan should identify and discuss any other material
factor that may impede the resolution of the CIDI.
Approval by CIDI's Board of Directors. The CIDI's board of
directors must approve the Resolution Plan. Such approval shall be
noted in the Board minutes.
Review of Resolution Plan. The FDIC desires to work closely with
CIDIs in the development of their Resolution Plans and is dedicating
staff for that purpose. The FDIC expects the review process to evolve
as CIDIs gain more experience in preparing their Resolution Plans. The
FDIC recognizes that plans will vary by institution and, in their
evaluation of plans, will take into account variances among
institutions in their core business lines, critical operations, foreign
operations, capital structure, risk, complexity, financial activities
(including the financial activities of their subsidiaries), size and
other relevant factors. Each Resolution Plan, however, must be
credible. A Resolution Plan is credible if its strategies for resolving
the CIDI, and the detailed information required by this section, are
well-founded and based on information and data related to the CIDI that
are observable or otherwise verifiable and employ reasonable
projections from current and historical conditions within the broader
financial markets.
Because each Resolution Plan is expected to be unique, the FDIC
encourages CIDIs to ask questions and, if so desired, to arrange a
meeting with the FDIC. The FDIC expects the initial Resolution Plan
will provide the foundation for developing more robust annual
Resolution Plans.
After receiving a Resolution Plan, the FDIC will determine whether
the submitted plan satisfies the minimum informational requirements of
this section. If the FDIC determines that a Resolution Plan is
informationally incomplete or that additional information is necessary
to facilitate review of the Resolution Plan, the FDIC will return the
Resolution Plan to the CIDI and inform the CIDI in writing of the
area(s) in which the plan is informationally incomplete or with respect
to which additional information is required. The CIDI must resubmit an
informationally complete Resolution Plan or such additional information
as requested to facilitate review of the Resolution Plan no later than
30 days after receiving the notice described in preceding sentence, or
such other time period as the FDIC may determine.
Upon acceptance of a Resolution Plan as complete, the FDIC will
review the Resolution Plan in consultation with the appropriate Federal
banking agency for the CIDI and its parent company. If, after
consultation with the appropriate Federal banking agency for the CIDI,
the FDIC determines that the Resolution Plan of a CIDI submitted is not
credible,
[[Page 3083]]
the FDIC will notify the CIDI in writing of such determination. Any
notice provided under this paragraph will identify the aspects of the
Resolution Plan that the FDIC determines to be deficient.
Within 90 days of receiving a notice of deficiencies issued
pursuant to the preceding paragraph, or such shorter or longer period
as the FDIC may determine, a CIDI must submit a revised Resolution Plan
to the FDIC that addresses the deficiencies identified by the FDIC and
discusses in detail the revisions made to address such deficiencies.
Upon a written request by a CIDI, the FDIC may extend any time
period under the Rule. Each extension request shall be in writing and
describe the basis and justification for the request.
Implementation Matters. In order to allow evaluation of the
Resolution Plan, each CIDI must provide the FDIC such information and
access to such personnel of the CIDI as the FDIC determines is
necessary to assess the credibility of the Resolution Plan and the
ability of the CIDI to implement the Resolution Plan. The FDIC will
rely to the fullest extent possible on examinations conducted by or on
behalf of the appropriate Federal banking agency for the relevant
company.
The CIDI's ability to produce the information and data underlying
its resolution rapidly and on demand is a vital element in a credible
Resolution Plan. While one commenter believes that this requirement
would be better addressed through the FDIC's ongoing review of
Resolution Plans than through a rule-based requirement, without up-to-
date information on the CIDI, the FDIC, as receiver, would be hampered
in implementing the Resolution Plan. Therefore, within a reasonable
period of time, as determined by the FDIC, after the filing of its
initial Resolution Plan, the CIDI must demonstrate its capability to
produce promptly, in a time frame and format acceptable to the FDIC,
accurate and verifiable data underlying the key aspects of Resolution
Plan. The FDIC understands that the capability to produce the data
underlying the key aspects of the Resolution Plan will vary by CIDI
and, therefore, intends to review and discuss the CIDI's plans to
remedy deficiencies as part of their review of a CIDI's initial
Resolution Plan. In addition, the Rule has been modified to require the
FDIC shall consult with the appropriate Federal banking agency for the
CIDI before any finding that the CIDI's capability to produce the
information and data underlying its resolution plan is unacceptable.
Notwithstanding the general requirements of this section, on a
case-by-case basis, the FDIC may extend, upon notice, the
implementation and updating time frames for all or part of the
requirements of this section. The FDIC may also, upon application of a
CIDI, exempt a CIDI from one or more of the requirements of this
section.
No limiting effect on the FDIC as receiver. No Resolution Plan
provided pursuant to the Rule shall be binding on the FDIC as
supervisor, deposit insurer or receiver for a CIDI or otherwise require
the FDIC to act in conformance with such plan.
Confidentiality of Information Submitted Pursuant to this Section.
Several commenters requested that the Resolution Plans be treated as
exempt from disclosure under the Freedom of Information Act (``FOIA'').
The FDIC is aware of and sensitive to the significant concerns
regarding confidentiality of Resolution Plans. The Rule contemplates
and requires the submission of highly detailed, internal proprietary
information of CIDIs. This is the type of information that CIDIs would
not customarily make available to the public and that an agency
typically would have access to and could review as part of the
supervisory process in assessing, for example, the safety and soundness
of a regulated institution. In the FDIC's view, release of this
information would impede the quality and extent of information provided
by CIDIs and could significantly impact the FDIC's efforts to encourage
effective and orderly resolution of the CIDIs in a crisis.
Under the Rule, the confidentiality of Resolution Plans is to be
assessed in accordance with the applicable exemptions under the FOIA, 5
U.S.C. 552(b), and the FDIC's Disclosure of Information Rule, 12 CFR
part 309. The FDIC certainly expects that large portions of the
submissions will contain or consist of ``trade secrets and commercial
or financial information obtained from a person and privileged or
confidential'' and information that is ``contained in or related to
examination, operating, or condition reports prepared by, on behalf of,
or for the use of an agency responsible for the regulation or
supervision of financial institutions.'' This information is subject to
withholding under exemptions 4 and 8 of the FOIA, 5 U.S.C. 552(b)(4)
and (8).
The FDIC also recognizes, however, that the regulation calls for
the submission of details regarding CIDIs that are publicly available
or otherwise are not sensitive and should be made public. Unless
inextricably intertwined with exempt information, these details would
be releasable under the FOIA. The FDIC is concerned that it and the
courts could reach inconsistent conclusions regarding which portions of
the Resolution Plans contain or consist of reasonably segregable
nonexempt information. This uncertainty, in turn, could impact the
quality and content of the information provided by CIDIs.
In order to reduce this uncertainty, the Rule requires Resolution
Plans to be divided into two sections: a public section and a
confidential section. The Rule further specifies the scope and content
of the information that is to comprise each section. In the FDIC's
view, the details required to be contained in the public section are or
should be publicly available. The public section of the Resolution Plan
should be segregated and separately identified from the confidential
section. The public section will be made available to the public in
accordance with the FDIC's Disclosure of Information Rule, 12 CFR part
309.
The confidential section of a Resolution Plan should contain and
consist of information that is subject to withholding under one or more
of the FOIA exemptions. A CIDI should submit a properly substantiated
request for confidential treatment of any details in the confidential
section that it believes are subject to withholding under exemption 4
of the FOIA. In addition, the FDIC will have to make formal exemption
and segregability determinations if and when a plan is requested under
the FOIA.
The public section of the Resolution Plan consists of an executive
summary of the Resolution Plan that describes the business of the CIDI
and includes, to the extent material to an understanding of the CIDI:
(i) The names of material entities; (ii) a description of core business
lines; (iii) consolidated financial information regarding assets,
liabilities, capital and major funding sources; (iv) a description of
derivative activities and hedging activities; (v) a list of memberships
in material payment, clearing and settlement systems; (vi) a
description of foreign operations; (vii) the identities of material
supervisory authorities; (viii) the identities of the principal
officers; (ix) a description of the corporate governance structure and
processes related to resolution planning; (x) a description of material
management information systems; and (xi) a description, at a high
level, of the CIDI's resolution strategy, covering such items as the
range of potential purchasers of the CIDI, its material entities and
core business lines.
[[Page 3084]]
IV. Paperwork Reduction Act
In accordance with the Paperwork Reduction Act (44 U.S.C. 3501 et
seq.) (``PRA''), the FDIC may not conduct or sponsor, and a person is
not required to respond to, a collection of information unless it
displays a currently valid Office of Management and Budget (OMB)
control number. The estimated burden for the reporting and disclosure
requirements, as set forth in the Notice of Proposed Rulemaking, is as
follows:
Title: Resolution plans required for insured depository
institutions with $50 billion or more in total assets.
OMB Number: 3064--New Collection.
Affected Public: Insured depository institutions with $50 billion
or more in total assets.
A. Estimated Number of Respondents for Contingent Resolution Plan:
37.
Frequency of Response: Once.
Estimated Time per Response: 7,200 hours per respondent.
Estimated Total Initial Burden: 266,400 hours.
B. Estimated Number of Respondents for Annual Update of Resolution
Plan: 37.
Frequency of Response: Annual.
Estimated Time per Response: 452 hours per respondent.
Estimated Total Initial Burden: 16,724 hours.
C. Estimated Number of Respondents for Notice of Material Change
affecting Resolution Plan: 37.
Frequency of Response: Zero to two times annually.
Estimated Time per Response: 226 hours per respondent.
Estimated Total Initial Burden: 8,362 hours.
Background/General Description of Collection: Section 360.10
contains collections of information pursuant to the PRA. In particular,
the following requirements of the Rule constitute collections of
information as defined by the PRA: all CIDIs are required to submit to
the FDIC a Resolution Plan that contains certain required information
and meets certain described standards; updates to the analysis and plan
are required to be submitted annually, with certain notices to be filed
more frequently as a result of material changes. The collections of
information contained in the Rule are being submitted to OMB for
review.
V. Regulatory Flexibility Act
The Regulatory Flexibility Act 5 U.S.C. 601 et seq. (RFA) requires
each federal agency to prepare a final regulatory flexibility analysis
in connection with the promulgation of a final rule, or certify that
the final rule will not have a significant economic impact on a
substantial number of small entities.\11\ Under regulations issued by
the Small Business Administration (``SBA''), a ``small entity''
includes those firms within the ``Finance and Insurance'' sector with
asset sizes that vary from $7 million or less in assets to $175 million
or less in assets.\12\ Therefore, insured depository institutions with
assets sizes of $175 million or less are considered small entities for
purposes of the RFA.
---------------------------------------------------------------------------
\11\ See 5 U.S.C. 603, 604 and 605.
\12\ 13 CFR 121.201.
---------------------------------------------------------------------------
The Rule would apply only to insured depository institutions with
$50 billion or more in total assets. The Rule would apply to 37 insured
depository institutions upon its effective date. Pursuant to section
605(b) of the Regulatory Flexibility Act, the FDIC certifies that the
Rule will not have a significant economic impact on a substantial
number of small entities and therefore a regulatory flexibility
analysis under the RFA is not required.
VI. Government Appropriations Act, 1999--Assessment of Federal
Regulations and Policies on Families
The FDIC has determined that the Rule will not affect family well-
being within the meaning of section 654 of the Treasury and General
Government Appropriations Act, enacted as part of the Omnibus
Consolidated and Emergency Supplemental Appropriations Act of 1999
(Pub. L. 105-277, 112 Stat. 2681).
VII. Plain Language
Section 722 of the Gramm-Leach-Bliley Act (Pub. L. 106-102, 113
Stat.1338, 1471), requires the Federal banking agencies to use plain
language in all proposed and final rules published after January 1,
2000. The FDIC has sought to present the Rule in a simple and
straightforward manner.
VIII. Small Business Regulatory Enforcement Fairness Act
The Office of Management and Budget has determined that the Rule is
not a ``major rule'' within the meaning of the Small Business
Regulatory Enforcement Fairness Act of 1996 (SBREFA) (5 U.S.C. 801 et
seq.). As required by SBREFA, the FDIC will file the appropriate
reports with Congress and the General Accounting Office so that the
Rule may be reviewed.
IX. Riegle Community Development and Regulatory Improvement Act
Section 302 of Riegle Community Development and Regulatory
Improvement Act (RCDRIA) \13\ generally requires that regulations
prescribed by Federal banking agencies which impose additional
reporting, disclosures or other new requirements on insured depository
institutions take effect on the first day of a calendar quarter which
begins on or after the date on which the regulations are published in
final form unless an agency finds good cause that the regulations
should become effective sooner. The effective date of the Rule is April
1, 2012, which is the first day of the calendar quarter which begins on
or after the date on which the regulations are published in final form,
as required by RCDRIA.
---------------------------------------------------------------------------
\13\ 12 U.S.C. 4802.
---------------------------------------------------------------------------
List of Subjects in 12 CFR Part 360
Banks, Banking, Bank deposit insurance, Holding companies, National
banks, Participations, Reporting and record keeping requirements,
Savings associations, Securitizations.
For the reasons stated above, the Board of Directors of the Federal
Deposit Insurance Corporation amends Part 360 of title 12 of the Code
of Federal Regulations as follows:
PART 360--RESOLUTION AND RECEIVERSHIP RULES
0
1. The authority citation for part 360 continues to read as follows:
Authority: 12 U.S.C. 1817(b), 1818(a)(2), 1818(t), 1819(a)
Seventh, Ninth and Tenth, 1820(b)(3), (4), 1821(d)(1),
1821(d)(10)(c), 1821(d)(11), 1821(e)(1), 1821(e)(8)(D)(i),
1823(c)(4), 1823(e)(2); Sec. 401(h), Pub. L. 101-73, 103 Stat. 357.
0
2. Revise Sec. 360.10 to read as follows:
Sec. 360.10 Resolution plans required for insured depository
institutions with $50 billion or more in total assets.
(a) Scope and purpose. This section requires each insured
depository institution with $50 billion or more in total assets to
submit periodically to the FDIC a plan for the resolution of such
institution in the event of its failure. This section also establishes
the rules and requirements regarding the submission and content of a
resolution plan as well as procedures for review by the FDIC of a
resolution plan. This section requires a covered insured depository
institution to submit a resolution plan that should enable the FDIC, as
receiver, to resolve the institution under Sections 11 and 13 of the
Federal Deposit Insurance Act (``FDI Act''), 12 U.S.C. 1821 and 1823,
in a manner that ensures that depositors receive access to their
insured deposits within one business day of the
[[Page 3085]]
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
realized by the creditors in the resolution. This rule is intended to
ensure that the FDIC has access to all of the material information it
needs to resolve efficiently a covered insured depository institution
in the event of its failure.
(b) Definitions--(1) Affiliate has the same meaning given such term
in Section 3(w)(6) of the FDI Act, 12 U.S.C. 1813(w)(6).
(2) Company has the same meaning given such term in Sec. 362.2(d)
of the FDIC's Regulations, 12 CFR 362.2(d).
(3) Core business lines means those business lines of the covered
insured depository institution (``CIDI''), including associated
operations, services, functions and support, that, in the view of the
CIDI, upon failure would result in a material loss of revenue, profit,
or franchise value.
(4) Covered insured depository institution (``CIDI'') means an
insured depository institution with $50 billion or more in total
assets, as determined based upon the average of the institution's four
most recent Reports of Condition and Income or Thrift Financial
Reports, as applicable to the insured depository institution.
(5) Critical services means services and operations of the CIDI,
such as servicing, information technology support and operations, human
resources and personnel that are necessary to continue the day-to-day
operations of the CIDI.
(6) Foreign-based company means any company that is not
incorporated or organized under the laws of the United States.
(7) Insured depository institution shall have the meaning given
such term in Section 3(c)(2) of the FDI Act, 12 U.S.C. 1813(c)(2).
(8) Material entity means a company that is significant to the
activities of a critical service or core business line.
(9) Parent company means the company that controls, directly or
indirectly, an insured depository institution. In a multi-tiered
holding company structure, parent company means the top-tier of the
multi-tiered holding company only.
(10) Parent company affiliate means any affiliate of the parent
company other than the CIDI and subsidiaries of the CIDI.
(11) Resolution plan means the plan described in paragraph (c) of
this section for resolving the CIDI under Sections 11 and 13 of the FDI
Act, 12 U.S.C. 1821 and 1823.
(12) Subsidiary has the same meaning given such term in Section
3(w)(4) of the FDI Act, 12 U.S.C. 1813(w)(4).
(13) Total assets are defined in the instructions for the filing of
Reports of Condition and Income and Thrift Financial Reports, as
applicable to the insured depository institution, for determining
whether it qualifies as a CIDI.
(14) United States means the United States and includes any state
of the United States, the District of Columbia, any territory of the
United States, Puerto Rico, Guam, American Samoa and the Virgin
Islands.
(c) Resolution Plans to be submitted by CIDI to FDIC.
(1) General. (i) Initial Resolution Plans Required. Each CIDI shall
submit a resolution plan to the FDIC, Attention: Office of Complex
Financial Institutions, 550 17th Street NW., Washington, DC 20429, on
or before the date set forth below (``Initial Submission Date''):
(A) July 1, 2012, with respect to a CIDI whose parent company, as
of November 30, 2011, had $250 billion or more in total nonbank assets
(or in the case of a parent company that is a foreign-based company,
such company's total U.S. nonbank assets);
(B) July 1, 2013, with respect to any CIDI not described paragraph
(c)(1)(i)(A) of this section whose parent company, as of November 30,
2011, had $100 billion or more in total nonbank assets (or, in the case
of a parent company that is a foreign-based company, such company's
total U.S. nonbank assets); and
(C) December 31, 2013, with respect to any CIDI not described in of
this paragraph (c)(1)(i)(A) or (B) of this section.
(ii) Submission by New CIDIs. An insured depository institution
that becomes a CIDI after April 1, 2012 shall submit its initial
resolution plan no later than the next July 1 following the date the
insured depository institution becomes a CIDI, provided such date
occurs no earlier than 270 days after the date on which the insured
depository institution became a CIDI.
(iii) After filing its initial Resolution Plan pursuant to
paragraph (c)(1)(i) or (c)(1)(ii) of this section, each CIDI shall
submit a Resolution Plan to the FDIC annually on or before each
anniversary date of its Initial Submission Date.
(iv) Notwithstanding anything to the contrary in this paragraph
(c)(1), the FDIC may determine that a CIDI shall file its initial or
annual Resolution Plan by a date other than as provided in this
paragraph (c). The FDIC shall provide a CIDI with written notice of a
determination under this paragraph (c)(1)(iv) no later than 180 days
prior to the date on which the FDIC determines to require the CIDI to
submit its Resolution Plan.
(v) Notice of Material Events. (A) Each CIDI shall file with the
FDIC a notice no later than 45 days after any event, occurrence, change
in conditions or circumstances or other change that results in, or
could reasonably be foreseen to have, a material effect on the
resolution plan of the CIDI. Such notice shall describe the event,
occurrence or change and explain why the event, occurrence or change
may require changes to the resolution plan. The CIDI shall address any
event, occurrence or change with respect to which it has provided
notice pursuant hereto in the following resolution plan submitted by
the CIDI.
(B) A CIDI shall not be required to file a notice under paragraph
(c)(1)(v)(A) of this section if the date on which the CIDI would be
required to submit a notice under paragraph (c)(1)(v)(A) would be
within 90 days prior to the date on which the CIDI is required to file
an annual Resolution Plan under paragraph (c)(1)(iii) of this section.
(vi) Incorporation of data and other information from a Dodd-Frank
Act resolution plan. The CIDI may incorporate data and other
information from a resolution plan filed pursuant to Section 165(d) of
the Dodd-Frank Wall Street Reform and Consumer Protection Act, 12
U.S.C. 5365(d), by its parent company.
(2) Content of the Resolution Plan. The resolution plan submitted
should enable the FDIC, as receiver, to resolve the CIDI in the event
of its insolvency under the FDI Act 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 realized by the creditors in the resolution in
accordance with Sections 11 and 13 of the FDI Act, 12 U.S.C. 1821 and
1823. The resolution plan strategies should take into account that
failure of the CIDI may occur under the baseline, adverse and severely
adverse economic conditions developed by the Board of Governors of the
Federal Reserve System pursuant to 12 U.S.C. 5365(i)(1)(B); provided,
however, a CIDI may submit its initial resolution plan assuming the
baseline conditions only, or, if a baseline scenario is not then
[[Page 3086]]
available, a reasonable substitute developed by the CIDI. At a minimum,
the resolution plan shall:
(i) Executive Summary. Include an executive summary describing the
key elements of the CIDI's strategic plan for resolution under the FDI
Act in the event of its insolvency. After the CIDI files its initial
plan, each annual resolution plan shall also describe:
(A) Material events, such as acquisitions, sales, litigation and
operational changes, since the most recently filed plan that may have a
material effect on the plan;
(B) Material changes to the CIDI's resolution plan from its most
recently filed plan; and
(C) Any actions taken by the CIDI since filing of the previous plan
to improve the effectiveness of its resolution plan or remediate or
otherwise mitigate any material weaknesses or impediments to the
effective and timely execution of the resolution plan.
(ii) Organizational Structure: Legal Entities; Core Business Lines
and Branches. Provide the CIDI's, parent company's, and affiliates'
legal and functional structures and identify core business lines.
Provide a mapping of core business lines, including material asset
holdings and liabilities related thereto, to material entities. Discuss
the CIDI's overall deposit activities including, among other things,
unique aspects of the deposit base or underlying systems that may
create operational complexity for the FDIC, result in extraordinary
resolution expenses in the event of failure and a description of the
branch organization, both domestic and foreign. Identify key personnel
tasked with managing core business lines and deposit activities and the
CIDI's branch organization.
(iii) Critical Services. Identify critical services and providers
of critical services. Provide a mapping of critical services to
material entities and core business lines. Describe the CIDI's strategy
for continuing critical services in the event of the CIDI's failure.
When critical services are provided by the parent company or a parent
company affiliate, describe the CIDI's strategy for continuing critical
services in the event of the parent company's or parent company
affiliate's failure. Assess the ability of each parent company
affiliate providing critical services to function on a stand-alone
basis in the event of the parent company's failure.
(iv) Interconnectedness to Parent Company's Organization; Potential
Barriers or Material Obstacles to Orderly Resolution. Identify the
elements or aspects of the parent company's organizational structure,
the interconnectedness of its legal entities, the structure of legal or
contractual arrangements, or its overall business operations that
would, in the event the CIDI were placed in receivership, diminish the
CIDI's franchise value, obstruct its continued business operations or
increase the operational complexity to the FDIC of resolution of the
CIDI. Identify potential barriers or other material obstacles to an
orderly resolution of the CIDI, inter-connections and inter-
dependencies that hinder the timely and effective resolution of the
CIDI, and include the remediation steps or mitigating responses
necessary to eliminate or minimize such barriers or obstacles.
(v) Strategy to Separate from Parent Company's Organization.
Provide a strategy to unwind or separate the CIDI and its subsidiaries
from the organizational structure of its parent company in a cost-
effective and timely fashion. Describe remediation or mitigating steps
that could be taken to eliminate or mitigate obstacles to such
separation.
(vi) Strategy for the Sale or Disposition of Deposit Franchise,
Business Lines and Assets. Provide a strategy for the sale or
disposition of the deposit franchise, including branches, core business
lines and major assets of the CIDI 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 such assets and minimizes the
amount of any loss realized in the resolution of cases.
(vii) Least Costly Resolution Method. Describe how the strategies
for the separation of the CIDI and its subsidiaries from its parent
company's organization and sale or disposition of deposit franchise,
core business lines and major assets can be demonstrated to be the
least costly to the Deposit Insurance Fund of all possible methods for
resolving the CIDI.
(viii) Asset Valuation and Sales. Provide a detailed description of
the processes the CIDI employs for:
(A) Determining the current market values and marketability of core
business lines and material asset holdings;
(B) Assessing the feasibility of the CIDI's plans, under baseline,
adverse and severely adverse economic condition scenarios for executing
any sales, divestitures, restructurings, recapitalizations, or similar
actions contemplated in the CIDI's resolution plan; and
(C) Assessing the impact of any sales, divestitures,
restructurings, recapitalizations, or other similar actions on the
value, funding and operations of the CIDI and its core business lines.
(ix) Major Counterparties. Identify the major counterparties of the
CIDI and describe the interconnections, interdependencies and
relationships with such major counterparties. Analyze whether the
failure of each major counterparty would likely have an adverse impact
on or result in the material financial distress or failure of the CIDI.
(x) Off-balance-sheet Exposures. Describe any material off-balance-
sheet exposures (including unfunded commitments, guarantees and
contractual obligations) of the CIDI and map those exposures to core
business lines.
(xi) Collateral Pledged. Identify and describe processes used by
the CIDI to:
(A) Determine to whom the CIDI has pledged collateral;
(B) Identify the person or entity that holds such collateral; and
(C) Identify the jurisdiction in which the collateral is located;
and if different, the jurisdiction in which the security interest in
the collateral is enforceable against the CIDI.
(xii) Trading, derivatives and hedges. Describe the practices of
the CIDI and its core business lines related to the booking of trading
and derivative activities. Identify each system on which the CIDI
conducts a material number or value amount of trades. Map each trading
system to the CIDI's legal entities and core business lines. Identify
material hedges of the CIDI and its core business lines related to
trading and derivative activities, including a mapping to legal entity.
Describe hedging strategies of the CIDI.
(xiii) Unconsolidated Balance Sheet of CIDI; Material Entity
Financial Statements. Provide an unconsolidated balance sheet for the
CIDI and a consolidating schedule for all material entities that are
subject to consolidation with the CIDI. Provide financial statements
for material entities. When available, audited financial statements
should be provided.
(xiv) Payment, clearing and settlement systems. Identify each
payment, clearing and settlement system of which the CIDI, directly or
indirectly, is a member. Map membership in each such system to the
CIDI's legal entities and core business lines.
[[Page 3087]]
(xv) Capital Structure; Funding Sources. Provide detailed
descriptions of the funding, liquidity and capital needs of, and
resources available to, the CIDI and its material entities, which shall
be mapped to core business lines and critical services. Describe the
material components of the liabilities of the CIDI and its material
entities and identify types and amounts of short-term and long-term
liabilities by type and term to maturity, secured and unsecured
liabilities and subordinated liabilities.
(xvi) Affiliate Funding, Transactions, Accounts, Exposures and
Concentrations. Describe material affiliate funding relationships,
accounts, and exposures, including terms, purpose, and duration, that
the CIDI or any of its subsidiaries have with its parent or any parent
company affiliate. Include in such description material affiliate
financial exposures, claims or liens, lending or borrowing lines and
relationships, guaranties, asset accounts, deposits, or derivatives
transactions. Clearly identify the nature and extent to which parent
company or parent company affiliates serve as a source of funding to
the CIDI and its subsidiaries, the terms of any contractual
arrangements, including any capital maintenance agreements, the
location of related assets, funds or deposits and the mechanisms by
which funds can be downstreamed from the parent company to the CIDI and
its subsidiaries.
(xvii) Systemically Important Functions. Describe systemically
important functions that the CIDI, its subsidiaries and affiliates
provide, including the nature and extent of the institution's
involvement in payment systems, custodial or clearing operations, large
sweep programs, and capital markets operations in which it plays a
dominant role. Discuss critical vulnerabilities, estimated exposure and
potential losses, and why certain attributes of the businesses detailed
in previous sections could pose a systemic risk to the broader economy.
(xviii) Cross-Border Elements. Describe material components of the
CIDI's structure that are based or located outside the United States,
including foreign branches, subsidiaries and offices. Provide detail on
the location and amount of foreign deposits and assets. Discuss the
nature and extent of the CIDI's cross-border assets, operations,
interrelationships and exposures and map to legal entities and core
business lines.
(xix) Management Information Systems; Software Licenses;
Intellectual Property. Provide a detailed inventory and description of
the key management information systems and applications, including
systems and applications for risk management, accounting, and financial
and regulatory reporting, used by the CIDI and its subsidiaries.
Identify the legal owner or licensor of the systems identified above;
describe the use and function of the system or application, and provide
a listing of service level agreements and any software and systems
licenses or associated intellectual property related thereto. Identify
and discuss any disaster recovery or other backup plans. Identify
common or shared facilities and systems as well as personnel necessary
to operate such facilities and systems. Describe the capabilities of
the CIDI's processes and systems to collect, maintain, and report the
information and other data underlying the resolution plan to management
of the CIDI and, upon request to the FDIC. Describe any deficiencies,
gaps or weaknesses in such capabilities and the actions the CIDI
intends to take to promptly address such deficiencies, gaps, or
weaknesses, and the time frame for implementing such actions.
(xx) Corporate Governance. Include a detailed description of:
(A) How resolution planning is integrated into the corporate
governance structure and processes of the CIDI;
(B) The CIDI's policies, procedures, and internal controls
governing preparation and approval of the resolution plan; and
(C) The identity and position of the senior management official of
the CIDI who is primarily responsible and accountable for the
development, maintenance, implementation, and filing of the resolution
plan and for the CIDI's compliance with this section.
(xxi) Assessment of the Resolution Plan. Describe the nature,
extent, and results of any contingency planning or similar exercise
conducted by the CIDI since the date of the most recently filed
resolution plan to assess the viability of or improve the resolution
plan.
(xxii) Any other material factor. Identify and discuss any other
material factor that may impede the resolution of the CIDI.
(3) Approval. The CIDI's board of directors must approve the
resolution plan. Such approval shall be noted in the Board minutes.
(4) Review of Resolution Plan.
(i) Each resolution plan submitted shall be credible. A resolution
plan is credible if its strategies for resolving the CIDI, and the
detailed information required by this section, are well-founded and
based on information and data related to the CIDI that are observable
or otherwise verifiable and employ reasonable projections from current
and historical conditions within the broader financial markets.
(ii) After receiving a resolution plan, the FDIC shall determine
whether the submitted plan satisfies the minimum informational
requirements of paragraph (c)(2) of this section; and either
acknowledge acceptance of the plan for review or return the resolution
plan if the FDIC determines that it is incomplete or that substantial
additional information is required to facilitate review of the
resolution plan.
(iii) If the FDIC determines that a resolution plan is
informationally incomplete or that additional information is necessary
to facilitate review of the plan, the FDIC shall inform the CIDI in
writing of the area(s) in which the plan is informationally incomplete
or with respect to which additional information is required.
(iv) The CIDI shall resubmit an informationally complete resolution
plan or such additional information as requested to facilitate review
of the resolution plan no later than 30 days after receiving the notice
described in paragraph (c)(4)(iii) of this section, or such other time
period as the FDIC may determine.
(v) Upon acceptance of a resolution plan as informationally
complete, the FDIC will review the resolution plan in consultation with
the appropriate Federal banking agency for the CIDI and its parent
company. If, after consultation with the appropriate Federal banking
agency for the CIDI, the FDIC determines that the resolution plan of a
CIDI submitted is not credible, the FDIC shall notify the CIDI in
writing of such determination. Any notice provided under this paragraph
shall identify the aspects of the resolution plan that the FDIC
determines to be deficient.
(vi) Within 90 days of receiving a notice of deficiencies issued
pursuant to the preceding paragraph, or such shorter or longer period
as the FDIC may determine, a CIDI shall submit a revised resolution
plan to the FDIC that addresses the deficiencies identified by the FDIC
and discusses in detail the revisions made to address such
deficiencies.
(vii) Upon its own initiative or a written request by a CIDI, the
FDIC may extend any time period under this section. Each extension
request shall be in writing and shall describe the basis and
justification for the request.
(d) Implementation Matters. (1) In order to allow evaluation of the
resolution plan, each CIDI must provide the FDIC such information and
access to such personnel of the CIDI as the FDIC determines is
necessary to assess the
[[Page 3088]]
credibility of the resolution plan and the ability of the CIDI to
implement the resolution plan. The FDIC will rely to the fullest extent
possible on examinations conducted by or on behalf of the appropriate
Federal banking agency for the relevant company.
(2) Within a reasonable period of time, as determined by the FDIC,
following its Initial Submission Date, the CIDI shall demonstrate its
capability to produce promptly, in a time frame and format acceptable
to the FDIC, the information and data underlying its resolution plan.
The FDIC shall consult with the appropriate Federal banking agency for
the CIDI before finding that the CIDI's capability to produce the
information and data underlying its resolution plan is unacceptable.
(3) Notwithstanding the general requirements of paragraph (c)(1) of
this section, on a case-by-case basis, the FDIC may extend, on its own
initiative or upon written request, the implementation and updating
time frames for all or part of the requirements of this section.
(4) FDIC may, on its own initiative or upon written request, exempt
a CIDI from one or more of the requirements of this section.
(e) No limiting effect on FDIC. No resolution plan provided
pursuant to this section shall be binding on the FDIC as supervisor,
deposit insurer or receiver for a CIDI or otherwise require the FDIC to
act in conformance with such plan.
(f) Form of Resolution Plans; Confidential Treatment of Resolution
Plans. (1) Each resolution plan of a CIDI shall be divided into a
Public Section and a Confidential Section. Each CIDI shall segregate
and separately identify the Public Section from the Confidential
Section. The Public Section shall consist of an executive summary of
the resolution plan that describes the business of the CIDI and
includes, to the extent material to an understanding of the CIDI:
(i) The names of material entities;
(ii) A description of core business lines;
(iii) Consolidated financial information regarding assets,
liabilities, capital and major funding sources;
(iv) A description of derivative activities and hedging activities;
(v) A list of memberships in material payment, clearing and
settlement systems;
(vi) A description of foreign operations;
(vii) The identities of material supervisory authorities;
(viii) The identities of the principal officers;
(ix) A description of the corporate governance structure and
processes related to resolution planning;
(x) A description of material management information systems; and
(xi) A description, at a high level, of the CIDI's resolution
strategy, covering such items as the range of potential purchasers of
the CIDI, its material entities and core business lines.
(2) The confidentiality of resolution plans shall be determined in
accordance with applicable exemptions under the Freedom of Information
Act (5 U.S.C. 552(b)) and the FDIC's Disclosure of Information Rules
(12 CFR part 309).
(3) Any CIDI submitting a resolution plan or related materials
pursuant to this section that desires confidential treatment of the
information submitted pursuant to 5 U.S.C. 552(b)(4) and the FDIC's
Disclosure of Information Rules (12 CFR part 309) and related policies
may file a request for confidential treatment in accordance with those
rules.
(4) To the extent permitted by law, information comprising the
Confidential Section of a resolution plan will be treated as
confidential.
(5) To the extent permitted by law, the submission of any
nonpublicly available data or information under this section shall not
constitute a waiver of, or otherwise affect, any privilege arising
under Federal or state law (including the rules of any Federal or state
court) to which the data or information is otherwise subject.
Privileges that apply to resolution plans and related materials are
protected pursuant to Section 18(x) of the FDI Act, 12 U.S.C. 1828(x).
Dated at Washington, DC this 17th day of January, 2012.
By order of the Board of Directors.
Federal Deposit Insurance Corporation.
Robert E. Feldman,
Executive Secretary.
[FR Doc. 2012-1136 Filed 1-20-12; 8:45 am]
BILLING CODE P