The FDIC has approved a final rule requiring an insured depository institution with $50 billion or more in total assets to submit to the FDIC periodic contingency plans for resolution in the event of the institution’s failure. These resolution plans will inform the FDIC’s ability, as receiver, to resolve the institution in a manner that ensures that depositors receive access to their insured deposits within one business day of the institution’s failure (two business days if the failure occurs on a day other than a Friday), maximizes the net-present-value return from the sale or disposition of its assets, and minimizes the amount of any loss to be realized by the institution’s creditors. The plans will supplement the FDIC’s own resolution planning work with information that would help facilitate an orderly resolution in the event of failure.
The final rule, adopted by the Board under the Federal Deposit Insurance Act, is a complement to separate joint rulemaking with the Federal Reserve that the FDIC Board approved in September 2011 under Section 165(d) of the Dodd-Frank Act. The Section 165(d) rule requires certain systemically important nonbank financial companies and bank holding companies to prepare resolution plans – the so-called “living wills” – for such entities to be resolved in an orderly manner under the Bankruptcy Code.
The final rule for insured depository institutions was preceded by an interim final rule adopted in September 2011. The interim final rule became effective on Jan. 1, 2012, and will remain in effect until it is superseded by this final rule effective April 1, 2012. The final rule includes several modifications that were made in response to comments received, including modifications to more closely align the final rule with the Section 165(d) rule.
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