As anticipated, the FDIC today unanimously approved a final rule to establish the resolution-planning process required by the Dodd-Frank Act. The meeting did not make entirely clear if the FRB has endorsed the changes to the joint NPR (see FSM Report LIVINGWILL4), although Acting Chairman Gruenberg suggested that this is the case. He and staff also made clear that the final rule is revised to address some industry concerns, especially with regard to staggering implementation, tailoring it to different business models and ensuring that resolution planning is an iterative dialogue, not a prescriptive process that could force immediate strategic redesign. The FDIC also finalized an interim final rule for insured depositories, moving ahead on a scheme first proposed (see FSM Report LIVINGWILL) before the Dodd-Frank Act was passed. The new standards here are, the FDIC argues, carefully coordinated with the systemic ones to limit duplicative work and ensure that institutions know how to plan for the different resolution regimes covered in all these requirements (e.g., bankruptcy, orderly liquidation and/or FDIC receivership for an insured depository). However, the rules remain complex and will continue to require significant work by all covered firms that could still lead to regulatory demand for structural change. Finally, the FDIC issued new assessment guidelines for its asset-based premium system (see FSM Report DEPOSITINSURANCE97), attempting to reassure large banks with statements that premium changes will only be made if they are material and that firms will have ample, formal opportunity to request review and protest any changes. This report analyzes the new resolution framework and FDIC discussion on it. In-depth FedFin analyses of the rules will follow shortly.
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