On Tuesday, November 1, 2011, the Board of Governors of the Federal Reserve System (the “Board”) and the Federal Deposit Insurance Corporation (the “FDIC”) each issued a final rule to implement the requirement, under Section 165(d) of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Act”), that “covered companies” submit to the Board, the FDIC and the Financial Stability Oversight Council (the “Council”), on a periodic basis, a plan for the company’s rapid and orderly resolution in the event of a material financial distress or failure. The final rule takes effect on November 30, 2011.
Previously, on April 22, 2011, the Board and the FDIC had issued a proposed rule for public comment with respect to this requirement. Comments were to have been received by June 10, 2011.
This final rule applies to the following “covered companies”:
- A bank holding company having $50 billion or more in total consolidated assets, as determined based upon the average of the company’s four most recent financial statements submitted on Form FR Y-9C
- A foreign bank or company that is, or is treated as, a bank holding company under Section 8(a) of the International Banking Act of 1978 and that has $50 billion or more in total consolidated assets, as determined based upon the average of the company’s four most recent quarterly financial statements submitted on Form FR Y-7Q (or based upon its most recent annual Form Y-7Q, if applicable)
- A non-bank company that the Council has determined under Section 113 of the Act should be supervised by the Board and for which such determination is in effect
Covered companies will be required to submit resolution plans (so-called “living wills”) to the Board and the FDIC on an annual basis and make them available to the Council upon request. Initial resolution plans must be submitted as follows:
- July 1, 2012, for any covered company that had, as of November 30, 2011, $250 billion or more in total non-bank assets (or, with respect to a foreign-based company, that amount in total U.S. non-bank assets)
- July 1, 2013, for any covered company not described above that had, as of November 30, 2011, $100 billion or more in total non-bank assets (or, with respect to a foreign-based company, that amount in total U.S. non-bank assets)
- December 31, 2013, for any company not described above that was a covered company as of November 30, 2011
The content requirements of resolution plans, and the procedure for the resubmission of deficient resolution plans, are set forth in detail in the final rule.