With FRB and FDIC review of living wills the dark cloud in the big banks’ summer sky, we have taken a look at new Basel resolution guidance to assess possible changes in U.S. policy. We do not expect any near-term impact on the pending resolution plans, although the triggers for TLAC will be based first by the FSB and then by the FRB on definitions in this guidance.

More importantly, we note that Basel’s approach will put still more pressure on host-country regulators to ring-fence operations to ensure resolvability. This will affect all cross-border banks, but U.S. ones will be under a particularly large gun here due to statutory requirements that the FDIC “prefer” U.S. depositors in any resolution.

If you have questions about this guidance or our analysis of it, please inquire by e-mail at info@fedfin.com. We would be pleased also to describe our analytical services – this assessment is part of an ongoing series of in-depth reports used by many large banks, other financial services firms, and regulators and central banks in the U.S. and around the world.