Federal financial services regulators have approved regulations that could shape the “living wills” that are supposed to explain how large, failing financial institutions can be safely dismantled.
The Federal Deposit Insurance Corp. (FDIC) says the new final living will rule will implement Section 165(d) of the Dodd-Frank Wall Street Reform and Consumer Protection Act.
Dodd-Frank Section 165(d) requires a company designated as systemically significant by the Financial Stability Oversight Council (FSOC) to give the FDIC and the Federal Reserve Board a regularly updated living will, or a plan for the company’s “rapid and orderly resolution in the event of material financial distress or failure.”
The FDIC will be issuing the rule jointly with the Federal Reserve Board, FDIC officials say.
The FDIC and the Federal Reserve Board will require that a resolution plan include a strategic analysis of the plan’s components; a description of the range of specific actions to be taken in the resolution; and analyses of the company’s organization, material entities, interconnections and interdependencies, and management information systems.
Companies with $250 billion or more in nonbank assets must submit plans on or before July 1, 2012, and companies with $100 billion or more in total nonbank assets must submit plans on or before July 1, 2013.
Companies that are mainly banks must submit plans on or before Dec. 31, 2013.