Comptroller of the Currency Jonathan Gould today said he sees no benefit in the FDIC continuing to require filings from large banks that detail their suggested orderly resolution in case of a bank failure, known as CIDI plans. He also suggested dialing back the scope of resolution plans for the largest banks.
The nation’s largest banks are required by the Dodd-Frank Act to submit resolution plans – also known as living wills – for their holding companies to banking regulators. However, the FDIC enacted a rule in 2012 requiring covered insured depository institutions, or CIDIs, to also submit resolution filings to the agency. In a speech at an American Bar Association event, Gould cited several concerns with CIDI plans, including that they can be used as a “backdoor” to influence banks’ ordinary course activities. (Gould serves on the FDIC board.)
“(CIDI plans) are not based on an explicit statutory requirement or authorization,” Gould said. “I see material drawbacks and costs associated with them, and I do not see their benefit. The FDIC’s resources could have been spent developing internal capabilities to resolve large banks, such as improvements to the receivership bidding process, rather than evaluating how banks think the FDIC should resolve them. Bank resources could have been better spent ensuring that they provide access to financial services in a safe and sound manner rather than working on how to fail and feeding an agency’s resolution planning bureaucracy.” He expressed support for recent and ongoing FDIC initiatives “toward improving internal capabilities to resolve banks.”
As for legally required living wills for the largest banks’ holding companies, Gould said that most people involved “would agree that there is room for improvement.” He suggested reducing the frequency and scope of the plans and taking a “hard look” at agency guidance that effectively acts as binding requirements.
