The Federal Deposit Insurance Corp. is proposing a rule with request for comments that implements section 210(c)(16) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, according to an FDIC notice issued today.
The FDIC, Washington, D.C., released the notice of the proposed rule today in the Federal Register (Volume 77, No. 59). The rule concerns enforcement of subsidiary and affiliate contracts by the FDIC as a receiver of a financial institution covered by the rule.
The rule would implement 12 U.S.C. section 5390(c)(16), which permits the FDIC, as a receiver for a financial company whose failure poses a “significant risk” to the U.S. economy’s financial stability to enforce contracts of subsidiaries or affiliates of the covered financial institution. The contract enforcement, the notice indicates, would happen “despite contract clauses that purport to terminate, accelerate or provide for other remedies based on the insolvency, financial condition or receivership of the covered financial company.”
The notice adds the proposed rule would clarify that the power of the FDIC as a receiver to enforce contracts of subsidiaries and affiliates under Dodd-Frank Act section 210©(16) effectively “preserves contractual relationships of subsidiaries and affiliates of the covered financial company during the orderly liquidation process.” The rule would identify certain contacts that are “linked to” the covered financial company with the meaning of the statute, as well as contracts that are also “supported by” the covered financial company.