FDIC’s Global Wind-Down Tour Makes More Stops

By Joe Adler

The Federal Deposit Insurance Corp.’s talks with foreign regulators about cross-border resolution plans have up to now mostly been a two-party exercise. But that is rapidly changing. As it seeks to coordinate wind-down mechanisms overseas, the FDIC has expanded its efforts beyond just the United Kingdom, elevating dialogue with other jurisdictions where U.S. firms do business and taking an active role in multilateral efforts to develop common resolution standards across many nations. But a laundry list of obstacles remains. “There is considerable progress in terms of working through a few very large institutions with operations based in the U.S. and the U.K. Beyond that, there is very little progress. The models are different. The resolution protocols, for example, in the EU are uncertain. If you go to Japan or China, they are still very different,” said Karen Shaw Petrou, managing partner for Federal Financial Analytics Inc. “The challenge with the U.K. was there was a single government with a clear set of policy objectives … but a lack of statutory authority to do what it committed to. The problem in the EU is that there are a lot of governments that completely disagree on everything having to do with resolution and they don’t have statutory authority to do much of anything anytime soon.”