The FDIC is proposing to reduce the amount of information that large banks must share in their insured depository institution resolution plans, and to raise the minimum asset size for requiring resolution submissions. The agency also proposed a separate rule to allow banks to share confidential FDIC information without first needing regulatory approval.
The FDIC board voted unanimously to advance a proposed rule to modify its resolution plan requirements to focus “information that most directly supports the FDIC’s resolution readiness in the event of material distress,” according to a board memo. It would eliminate more than half of the current rule’s content requirements, end the public comment requirement, and move all covered institutions to a three-year cycle for filing the renamed “resolution submissions.”
The proposed rule also would raise the asset threshold under which banks must submit resolution plans from $50 billion to $100 billion to reflect inflation since the existing rule’s implementation in 2022. FDIC staff said that under the new threshold, 16 of the 48 banks that must currently submit plans would no longer be required to do so.
“I have long been critical of the way the FDIC has historically approached resolution planning for such institutions, which has taken the form of lengthy narrative plans rather than focusing on the key information the FDIC needs to execute a resolution and on maximizing the likelihood of an optimal resolution outcome,” FDIC Chairman Travis Hill said about the need for the changes.
Rob Nichols, American Bankers Association President and CEO, commended the FDIC for today’s proposal.
“ABA has long called for reforms to ensure bank resolutions are data-driven and focused on the key operational information needed to facilitate orderly resolutions without placing unreasonable requirements on banks, and the proposal unveiled today is in that spirit,” Nichols said, adding that ABA would “carefully review” today’s proposal with its members, “and we look forward to offering our perspective during the comment process.”
Information sharing
Under current regulations, banks must seek the prior approval of the FDIC in order to disclose confidential agency information to third parties, including their attorneys, accountants, auditors and other partners, according to a statement.
The board advanced a proposed rule to allow banks to share that information with certain parties without first obtaining FDIC authorization, as long as the information is being shared for a business purpose and both parties have entered into a confidentiality agreement.
The proposal would also simplify the process for the FDIC’s discretionary disclosure of confidential information, the agency said. Finally, it would update and simplify the FDIC’s rules regarding the Freedom of Information Act, the FDIC’s disclosure of information in connection with legal proceedings, and service of process upon the FDIC and its directors, officers and employees.
Comments on both proposed rules will be accepted for 60 days after publication in the Federal Register.
