FDIC board adopts tighter resolution‑plan requirements for very large banks

The Federal Deposit Insurance Corporation board on Tuesday adopted a final rule revising resolution‑plan requirements for insured depository institutions with $50 billion or more in total assets, aiming to improve the agency’s readiness to handle failures of very large banks while reducing costs to the Deposit Insurance Fund.

FDIC staff told the board the rule retains the $50 billion threshold and creates two covered‑IDI tiers: group A CIDIs (institutions with at least $100 billion in assets) must submit full, end‑to‑end resolution plans with strategies for forming and stabilizing a bridge depository institution; group B CIDIs (between $50 billion and $100 billion) will submit more limited informational filings. “This final rule will incorporate lessons learned from past plan reviews and past bank resolutions and will meaningfully improve the FDIC’s readiness to handle future large bank failures with reduced cost and increased orderliness,” an FDIC staff presenter said during the meeting.

The rule also establishes a two‑prong credibility standard: one prong for the identified strategy (applying to group A CIDIs) and a second prong for the factual bases and analyses in submissions (applying to both groups). Staff added an intermediate “significant finding” category between informal feedback and a material weakness to provide calibrated, actionable feedback that can be remediated before rising to a material weakness. Staff said most CIDIs will file on a three‑year (triennial) cycle, while CIDIs affiliated with U.S. global systemically important banking organizations will file on a two‑year cycle.

Several directors expressed support for the rule’s goal. Director Chokhut said the requirements — including the ability to establish a virtual due‑diligence data room quickly and identify separable franchise components — would improve orderly resolution and the prospects of recovery. Director Chopra told the board that better plan information could meaningfully inform the FDIC’s least‑cost analysis and help the agency pursue alternative strategies such as selling valuable components to multiple buyers.

But two directors said they would vote against the final rule. Vice Chairman Hill said he planned to vote no because the final rule, in his view, goes beyond lessons from the 2023 bank failures and imposes detailed hypothetical valuation and content requirements that may not justify their cost. “I am skeptical that the expected benefit of such information in a hypothetical resolution justifies the cost of producing them,” he said. Director McKierney said he could not support the rule because he is not persuaded the FDIC has the legal authority to require certain capabilities or to impose restrictions that could force significant changes in banks’ business models, and he suggested Congress may need to clarify authority.

The board approved the final rule by roll‑call vote. The chair voted aye; Vice Chairman Hill and Director McKierney voted no; Directors Hsu and Chopra voted aye. The motion was adopted.

Staff told the board the rule’s effective date is expected to be Oct. 1, and that implementing the rule will require letters to CIDIs notifying them of the timing for their first resolution submissions and a program of feedback, capabilities testing, and a tiered delegation structure for certain administrative decisions. The FDIC cited the Federal Deposit Insurance Act and said the rule is informed by the Dodd‑Frank Act Title I resolution plan framework and prior plan‑review experience.