The Board of Directors of the FDIC approved a final rule (the “Final Rule”) requiring insured depository institutions with $50 billion or more in total assets (“Covered Banks”) to submit to the FDIC periodic contingency plans concerning the Covered Bank’s resolution in the event of its failure (a “Resolution Plan”). The Resolution Plans are intended to help the FDIC resolve a Covered Bank in a manner that would allow depositors to gain access to their insured deposits within one business day of the date of failure (or two business days if the failure occurs on a day other than a Friday) and that minimizes the losses realized by the Covered Bank’s creditors. The Final Rule replaces an interim final rule adopted by the FDIC in September 2011 and described briefly in the September 20, 2011 Financial Services Alert. The Final Rule complements the separate joint rulemaking by the FRB and the FDIC, described in the September 20, 2011 Financial Services Alert, that requires certain systemically important nonbank financial companies and bank holding companies to prepare resolution plans, referred to as “living wills,” that address the resolution of these entities under the federal Bankruptcy Code. The FDIC said that currently 37 depository institutions are Covered Banks. The Final Rule becomes effective on April 1, 2012.
Alert January 24, 2012