FDIC Chair Jelena McWilliams highlighted recent regulatory developments and additional work concerning resolution planning for large institutions in a cross-border context.
In a speech before the Institute of International Finance Bank Policy Institute, Ms. McWilliams noted recent progress in improving the resolution-planning process and reducing its burdens, such as:
- U.S. global systemically important banks ("G-SIBs") developing a single-point-of-entry resolutions strategy to preserve operations of key subsidiaries if the parent enters bankruptcy proceedings;
- Congress raising the statutory threshold for resolution planning from $50 to $250 billion;
- U.S. prudential regulators' proposal to allow (i) firms to submit "targeted" rather than "full" plans and (ii) U.S. G-SIBs to submit resolution plans every two years, alternating between targeted and full plans;
- FDIC reviewing the current $50 billion threshold for resolution planning for insured depository institutions; and
- FDIC seeking feedback on replacing the formal plan submissions for smaller, less-complex firms.
Ms. McWilliams warned regulators to ensure that central counterparties, which are not required to submit resolutions plans despite conducting significant international business, will be able to function during periods of financial stress.
Additionally, she urged regulators to consider the possibility of a resolution driven by a cyber incident, which could have international implications. Some of the potential challenges that the FDIC is currently assessing include:
- the potential "abruptness" of such a disruption, which may affect the ordinary recovery and resolution-planning timelines;
- uncertainty regarding the impact and, therefore, the timeliness of restoring systems or data after a cyber incident;
- questions regarding the reliability and accessibility of information on which regulators typically rely when conducting a resolution; and
- whether the current resolution tool kits, which are designed for financial impairments, would remain useful in a cyber incident.
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