The FDIC was ill-prepared to resolve large regional banks at the time of last year’s failures of Silicon Valley Bank and two other banks, with the weakness magnified by the speed at which the failures occurred, the FDIC Office of Inspector General concluded in a new report.
The OIG assessed the FDIC’s readiness to resolve large regional banks before the failures of SVB, Signature Bank and First Republic Bank. The office concluded that the agency had not fully met the human and technology resource needs for handling a resolution, nor had it sufficiently coordinated resources among its divisions and offices.
“As a result, the FDIC did not satisfy the readiness activities for planning, training, exercises, evaluation and monitoring consistent with best practices,” the OIG said in its report. “The FDIC could have been more effective in demonstrating its readiness by completing, communicating and coordinating regional resolution framework guidance, improving resolution plans, training key staff on resolution roles, conducting interdivisional resolution exercises and evaluating and monitoring resolution readiness.”
The OIG made 11 recommendations to “further mature” the FDIC’s readiness for resolving large regional bank failures. They include improving interdivisional coordination of human and information technology resources; completing or revising resolution guidance, plans and agreements to address significant gaps; increasing interdivisional coordination over planning and exercises; and ensuring regular training of key resolution staff. The FDIC concurred with all 11 corrective actions and plans to complete them by June 30, 2026.
