Alert September 20, 2011

FDIC Board of Directors Approves Living Will Rules

The FDIC Board of Directors adopted a final rule (the “Final Rule) concerning the requirement under Section 165(d) of the Dodd-Frank Act that large bank holding companies with assets of $50 million or more and other financial companies designated by the Financial Stability Oversight Counsel as “systematically important” submit formal resolution plans referred to as “living wills.”  See the discussion of the proposed version of the Final Rule in the April 5, 2011 Financial Services Alert.  The FDIC stated that the Final Rule “sets specific standards for the resolution plans, including requiring a strategic analysis of the plan’s components, a description of the range of specific actions to be taken in the resolution, and analyses of the company’s organization, material entities, interconnections and interdependencies, and management information systems among other elements.”  The Final Rule provides greater flexibility than the proposed version of the rule, and the initial due date for living wills from the first of three staggered groups of covered companies will be July 1, 2012.  The FDIC Board also approved a separate Interim Final Rule that requires resolution plans from large FDIC-insured depository institutions that are not subject to the federal Bankruptcy Code.  The Interim Final Rule will have a 60-day comment period after it is published in the Federal Register and will be effective January 1, 2012.  The Final Rule must also be approved by the FRB and will be effective 30 days after it is published in the Federal Register.