In its second action of the day, the FDIC advanced a joint rule with the FRB addressing the resolution-planning and related credit-exposure provisions in the Dodd-Frank Act (see FSM Report SYSTEMIC29). The law requires any firm deemed systemic and all BHCs with assets over $50 billion to prepare resolution plans (often called living wills) that demonstrate their ability to be shut down in an orderly fashion even under extreme stress. The law also requires reports on the exposure these firms have to other large financial institutions in an effort to assess systemic interconnectedness. If regulators are dissatisfied with a resolution plan, they have strong powers to force its revision or even to mandate that a firm restructure itself through divestitures and other actions.
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