Resolution Plans Required, 59194-59228 [2019-23967]
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Federal Register / Vol. 84, No. 212 / Friday, November 1, 2019 / Rules and Regulations
FEDERAL RESERVE SYSTEM
12 CFR Part 243
[Regulation QQ; Docket No. R–1660]
RIN 7100–AF47
FEDERAL DEPOSIT INSURANCE
CORPORATION
12 CFR Part 381
RIN 3064–AE93
Resolution Plans Required
Board of Governors of the
Federal Reserve System (Board) and
Federal Deposit Insurance Corporation
(Corporation).
ACTION: Final rule.
AGENCY:
The Board and the
Corporation (together, the agencies) are
jointly adopting this final rule
implementing the resolution planning
requirements of section 165(d) of the
Dodd-Frank Wall Street Reform and
Consumer Protection Act (the DoddFrank Act). This final rule is intended
to reflect improvements identified since
the agencies finalized their joint
resolution plan rule in November 2011
(2011 rule) and to address amendments
to the Dodd-Frank Act made by the
Economic Growth, Regulatory Relief,
and Consumer Protection Act
(EGRRCPA). Through this final rule, the
Board is also establishing risk-based
categories for determining the
application of the resolution planning
requirement to certain U.S. and foreign
banking organizations, consistent with
section 401 of EGRRCPA. The final rule
also extends the default resolution plan
filing cycle, allows for more focused
resolution plan submissions, and
improves certain aspects of the
resolution planning rule.
DATES: This rule is effective December
31, 2019.
FOR FURTHER INFORMATION CONTACT:
Board: Mona Elliot, Deputy Associate
Director, (202) 912–4688, Catherine
Tilford, Assistant Director, (202) 452–
5240, Kathryn Ballintine, Lead
Financial Institution Policy Analyst,
(202) 452–2555, or Tudor Rus, Lead
Financial Institution Policy Analyst,
(202) 475–6359, Division of Supervision
and Regulation; or Laurie Schaffer,
Associate General Counsel, (202) 452–
2272, Jay Schwarz, Special Counsel,
(202) 452–2970, Steve Bowne, Senior
Counsel, (202) 452–3900, or Sarah
Podrygula, Attorney, (202) 912–4658,
Legal Division, Board of Governors of
the Federal Reserve System, 20th and C
Streets NW, Washington, DC 20551. For
SUMMARY:
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users of Telecommunications Device for
the Deaf (TDD), (202) 263–4869.
Corporation: Lori J. Quigley, Deputy
Director, Institutions Monitoring Group,
lquigley@fdic.gov; Robert C. Connors,
Associate Director, Large Bank
Supervision Branch, rconnors@fdic.gov;
and Alexandra Steinberg Barrage,
Associate Director, Resolution Strategy
and Policy, Division of Complex
Institution Supervision & Resolution,
abarrage@fdic.gov; or David N. Wall,
Assistant General Counsel, dwall@
fdic.gov; Celia Van Gorder, Supervisory
Counsel, cvangorder@fdic.gov; Dena S.
Kessler, Counsel, dkessler@fdic.gov; or
Ryan M. Rappa, Counsel, rrappa@
fdic.gov, Legal Division, Federal Deposit
Insurance Corporation, 550 17th Street
NW, Washington, DC 20429.
SUPPLEMENTARY INFORMATION:
I. Introduction
A. Background
B. Overview of the Proposed Rule
II. Overview of Comments
III. Final Rule
A. Identification of Firms Subject to the
Resolution Planning Requirement and
Filing Groups
1. Firms Subject to the Resolution Planning
Requirement
2. Filing Groups and Filing Cycle
B. Resolution Plan Content
1. General Guidance and Firm-Specific
Feedback
2. Material Changes and Extraordinary
Events
3. Full Resolution Plans
4. Waivers of Informational Content
Requirements
5. Targeted Resolution Plans
6. Reduced Resolution Plans
7. Tailored Resolution Plans
C. Critical Operations Methodology and
Reconsideration Process
1. Identification by Covered Companies
and Methodology Requirement
2. Identification by Agencies and Requests
for Reconsideration
D. Clarifications to the 2011 Rule
1. Resolution Strategy for Foreign-Based
Covered Companies
2. Covered Companies in Multi-Tier
Foreign Banking Organization Holding
Companies
3. Removal of the Incompleteness Concept
and Related Review
4. Assessment of New Covered Companies
5. Timing of New Filings, Firms That
Change Filing Categories
6. Clarification of the Mapping
Expectations for Foreign Banking
Organizations
7. Standard of Review
8. Deletion of ‘‘Deficiencies’’ Relating to
Management Information Systems
9. Incorporation by Reference
E. Technical and Conforming Changes
From the Proposal
F. Board Delegation of Authority
IV. Effective Date and Transition Period
V. Impact Analysis
VI. Regulatory Analysis
A. Paperwork Reduction Act
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B. Regulatory Flexibility Act
C. Riegle Community Development and
Regulatory Improvement Act of 1994
D. Plain Language
E. The Congressional Review Act
I. Introduction
A. Background
Section 165(d) of the Dodd-Frank
Act 1 and the 2011 rule 2 require certain
financial companies (covered
companies) to report periodically to the
agencies their plans for rapid and
orderly resolution under the U.S.
Bankruptcy Code (the Bankruptcy Code)
in the event of material financial
distress or failure. The goal of the DoddFrank Act resolution planning process is
to help ensure that a covered company’s
failure would not have serious adverse
effects on financial stability in the
United States. The Dodd-Frank Act and
the 2011 rule require a covered
company to submit a resolution plan for
review by the agencies. The resolution
planning process requires covered
companies to demonstrate that they
have adequately assessed the challenges
that their structures and business
activities pose to a rapid and orderly
resolution in the event of material
financial distress or failure and that they
have taken action to address those
challenges, including through the
development of capabilities appropriate
to the covered company’s size and
complexity.
Implementation of the 2011 rule has
been an iterative process aimed at
strengthening the resolvability and
resolution planning capabilities of
covered companies. Since finalization of
the 2011 rule, the agencies have
reviewed multiple resolution plan
submissions and have provided
feedback on individual resolution plans
following their review by the agencies
(firm-specific feedback) and guidance
directed to groups of firms (general
guidance) to assist covered companies
in their development of subsequent
resolution plan submissions.
EGRRCPA revised the resolution
planning requirement as part of the
changes the law made to application of
the enhanced prudential standards in
section 165 of the Dodd-Frank Act.
Specifically, EGRRCPA raised the $50
billion minimum asset threshold for
general application of the resolution
planning requirement to $250 billion in
total consolidated assets, and provided
the Board with discretion to apply the
resolution planning requirement to
firms with $100 billion or more and less
than $250 billion in total consolidated
1 12
2 76
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U.S.C. 5365(d).
FR 67323 (November 1, 2011).
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assets.3 The threshold increase occurs in
two stages. Immediately on the date of
EGRRCPA’s enactment, firms with total
consolidated assets of less than $100
billion (for foreign banking
organizations, $100 billion in total
global assets) were no longer subject to
the resolution planning requirement.
Eighteen months after the date of
EGRRCPA’s enactment, the threshold
increases to $250 billion in total
consolidated assets. However,
EGRRCPA provides the Board with the
authority to apply resolution planning
requirements to firms with $100 billion
or more and less than $250 billion in
total consolidated assets. Specifically,
under section 165(a)(2)(C) of the DoddFrank Act, as revised by EGRRCPA, the
Board may, by order or rule, apply the
resolution planning requirement to any
firm or firms with total consolidated
assets of $100 billion (for foreign
banking organizations, $100 billion in
total global assets) or more.4
In May 2019, the agencies invited
comment on a proposal to amend and
restate the 2011 rule (the proposed rule
or proposal).5 The proposed rule was
intended to address amendments to the
Dodd-Frank Act made by the EGRRCPA
and improve certain aspects of the 2011
rule based on the agencies’ experience
implementing the 2011 rule since its
adoption. The agencies are now
finalizing the proposed rule, with
certain changes based on public
comments on the proposed rule, as
described in detail below.
The Board’s Tailoring Rules
Consistent with section 401 of
EGRRCPA, the Board finalized two
separate proposals to revise the
framework for determining the
prudential standards that should apply
to large U.S. banking organizations
(domestic tailoring rule) 6 and to large
foreign banking organizations (FBO
3 EGRRCPA also provides that any bank holding
company, regardless of asset size, that has been
identified as a U.S. global systemically important
bank (U.S. GSIB) under the Board’s U.S. GSIB
surcharge rule shall be considered a bank holding
company with $250 billion or more in total
consolidated assets for purposes of the application
of the resolution planning requirement. EGRRCPA
section 401(f), Public Law 115 174, 132 Stat. 1296.
4 12 U.S.C. 5365(a); EGRRCPA section
401(a)(1)(B)(iii) (to be codified at 12 U.S.C.
5365(a)(2)(C)). See also EGRRCPA section 401(g).
5 84 FR 21600 (May 14, 2019).
6 Prudential Standards for Large Bank Holding
Companies and Savings and Loan Holding
Companies, 83 FR 61408 (November 29, 2018). The
Board’s final rule is published elsewhere in this
issue of the Federal Register and is also available
on the Board’s website at https://
www.federalreserve.gov/aboutthefed/
boardmeetings/files/tailoring-rule-fr-notice20191010a2.pdf.
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tailoring rule 7 and together with the
domestic tailoring rule, the tailoring
rules). Among other provisions, the
tailoring rules identify distinct
standards applicable to firms for the
purpose of calibrating requirements.
The tailoring categories established in
the tailoring rules are as follows:
• Category I standards will apply to:
Æ Global systemically important bank
holding companies (U.S. GSIBs),
• Category II standards will apply to:
Æ U.S. firms that are not subject to
Category I standards with (a) $700
billion or more in average total
consolidated assets, or (b) $100 billion
or more in average total consolidated
assets that have $75 billion or more in
average cross-jurisdictional activity, and
Æ Foreign banking organizations with
(a) $700 billion or more in average
combined U.S. assets,8 or (b) $100
billion or more in average combined
U.S. assets that have $75 billion or more
in average cross-jurisdictional activity
measured based on the foreign banking
organization’s combined U.S.
operations.9
• Category III standards will apply to:
Æ U.S. firms that are not subject to
Category I or Category II standards with
(a) $250 billion or more in average total
consolidated assets, or (b) $100 billion
or more in average total consolidated
assets that have $75 billion or more in
any of the following risk-based
indicators: Average total nonbank
assets, average weighted short-term
wholesale funding, or average offbalance sheet exposure, and
Æ Foreign banking organizations that
are not subject to Category II standards
7 Prudential Standards for Large Foreign Banking
Organizations; Revisions to Proposed Prudential
Standards for Large Domestic Bank Holding
Companies and Savings and Loan Holding
Companies, 84 FR 21988 (May 15, 2019). The
Board’s final rule is published elsewhere in this
issue of the Federal Register and is also available
on the Board’s website at https://
www.federalreserve.gov/aboutthefed/
boardmeetings/files/tailoring-rule-fr-notice20191010a2.pdf.
8 Combined U.S. assets means the sum of the
consolidated assets of each top-tier U.S. subsidiary
of the foreign banking organization (excluding any
section 2(h)(2) company as defined in section
2(h)(2) of the Bank Holding Company Act (12 U.S.C.
1841(h)(2)), if applicable) and the total assets of
each U.S. branch and U.S. agency of the foreign
banking organization, as reported by the foreign
banking organization on the FR Y–7Q.
9 The combined U.S. operations of a foreign
banking organization include any U.S. subsidiaries
(including any U.S. intermediate holding company),
U.S. branches, and U.S. agencies. In addition, for
a foreign banking organization that is not required
to form a U.S. intermediate holding company,
combined U.S. operations refer to its U.S. branch
and agency network and the U.S. subsidiaries of the
foreign banking organization (excluding any section
2(h)(2) company as defined in section 2(h)(2) of the
Bank Holding Company Act (12 U.S.C. 1841(h)(2),
if applicable) and any subsidiaries of such U.S.
subsidiaries.
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with (a) $250 billion or more in average
combined U.S. assets, or (b) $100 billion
or more in average combined U.S. assets
that have $75 billion or more in any of
the following risk-based indicators
measured based on the combined U.S.
operations: Average total nonbank
assets, average weighted short-term
wholesale funding, or average offbalance sheet exposure and
• Category IV standards will apply to:
Æ U.S. firms with $100 billion or
more in average total consolidated
assets that do not meet any of the
thresholds specified for Categories I
through III, and
Æ Foreign banking organizations with
$100 billion or more in average
combined U.S. assets that do not meet
any of the thresholds specified for
Categories II or III.
These categories form the basis for the
final rule’s framework for imposing
resolution planning requirements, with
adjustments where appropriate. The
categories are also used to tailor the
content of the resolution planning
requirements, taking into account
covered companies’ particular
geographic footprints, operations, and
activities, as described below.
B. Overview of the Proposed Rule
Under the proposed rule, resolution
planning requirements would have
applied to (1) those firms that are
statutorily required to submit resolution
plans (i.e., U.S. and foreign banking
organizations with $250 billion or more
in total consolidated assets, the U.S.
GSIBs, and any non-bank financial
company designated by the Financial
Stability Oversight Council (Council) for
supervision by the Board) and (2) firms
with total consolidated assets of $100
billion or more and less than $250
billion that would have been subject to
Category II or III standards under the
notices of proposed rulemaking for the
tailoring rules. In particular, the Board
would have applied resolution planning
requirements to firms with total
consolidated assets of $100 billion or
more and less than $250 billion that
would have had $75 billion or more in
any of the following four risk-based
indicators: Cross-jurisdictional activity,
nonbank assets, weighted short-term
wholesale funding, or off-balance-sheet
exposure. In the case of a foreign
banking organization, resolution
planning requirements would only have
applied if the firm also had combined
U.S. assets equal to $100 billion or
more, and the risk-based indicators
would have been measured based on the
firm’s combined U.S. operations.
The proposed rule would have
divided firms subject to resolution
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planning requirements into three
categories for purposes of determining
submission frequency and resolution
plan content requirements. The U.S.
GSIBs would have been required to
submit a resolution plan every two
years, alternating between full and
targeted resolution plans. Firms subject
to Category II or III standards under the
notices of proposed rulemaking for the
tailoring rules would have been
required to submit a resolution plan
every three years, alternating between
full and targeted resolution plans. Other
foreign banking organizations subject to
the proposed rule but not subject to
Category II or III standards would have
been required to submit a resolution
plan every three years, with their initial
filing being a full resolution plan and
each subsequent submission being a
reduced resolution plan. The proposal
would have generally maintained the
same informational content
requirements for full resolution plans as
under the 2011 rule, but would have
established a new process whereby
covered companies could request a
waiver from certain informational
content requirements in their full
resolution plans. Under the proposal,
covered companies would have been
required to include in targeted
resolution plans and reduced resolution
plans information about certain changes
since their previous resolution plan
submission. Targeted resolution plans
would also have included information
about certain resolution planning core
elements and information responsive to
the agencies’ targeted information
requests.
The proposed rule would also have
made certain procedural changes to the
provisions of the 2011 rule relating to
the identification of critical operations.
The proposal would have established
formal processes for firms and the
agencies to identify particular
operations of covered companies as
critical operations and to rescind prior
critical operations identifications made
by the agencies. In addition, the
proposal would have specified a process
for a covered company to request
reconsideration of operations previously
identified by the agencies as critical
operations, and required that a covered
company notify the agencies if it ceased
to identify an operation as a critical
operation.
II. Overview of Comments
The agencies received and reviewed
14 comment letters on the proposed
rule. Commenters included various
financial services trade associations,
covered companies, public interest
groups, and individuals. In addition, the
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agencies met with industry
representatives at their request to
discuss issues relating to the proposed
rule. This section provides an overview
of the general themes raised by
commenters. Comments are addressed
in further detail in the below sections
describing the final rule, including any
changes that the agencies have made to
the proposed rule in response to
comments.
General Support and Opposition
A number of commenters generally
supported the proposed rule. These
commenters supported the proposed
rule’s efforts to tailor resolution
planning requirements to a firm’s size,
complexity, and risk profile, and
asserted that the proposed rule would
preserve and improve upon key
elements of resolution planning while
enhancing transparency and
meaningfully reducing burden.10
Several commenters raised concerns
about the proposed rule. These
commenters generally asserted that the
proposed rule would inappropriately
weaken financial regulations put in
place after the 2008 financial crisis and
thereby increase systemic risk. In
addition, certain commenters asserted
that the proposed rule inappropriately
relied on burden reduction as a
rationale for the proposed changes, was
inconsistent with administrative law
because the agencies did not provide
sufficient justification for reducing the
frequency and content of resolution
plans, and was inconsistent with the
Dodd-Frank Act. One commenter
questioned whether firms would
reallocate resources no longer needed to
comply with the current rule to
activities considered to be more
beneficial, and whether any such benefit
would accrue to the public at large. One
commenter also asserted that the
agencies should delay modifying the
2011 rule until it has been tested in an
economic downturn, and another
commenter asserted that the agencies
should be cognizant of the effect of
regulations on non-financial companies
and small business lending. As further
explained below, the final rule would
continue to apply appropriate
10 Certain commenters also made assertions that
characterized the agencies’ views of prior resolution
plan submissions under the 2011 rule or the
agencies’ rationale for proposing certain changes to
the 2011 rule. The agencies are not responding to
or endorsing these assertions in this preamble. The
agencies’ views regarding individual resolution
plans are communicated to covered companies
following the agencies’ review of those resolution
plans. Separately, certain commenters proposed
strengthening regulatory requirements that are
unrelated to the resolution planning rule. These
comments are outside the scope of this rulemaking.
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requirements on firms based on the
relative risk that a firm’s failure would
pose to U.S. financial stability, and
would preserve and improve upon key
elements of the resolution planning
framework that were put in place after
the 2008 financial crisis. The agencies
believe that this approach is consistent
with the Dodd-Frank Act, as amended
by the EGRRCPA, which generally
provides for the tailoring of enhanced
prudential standards based on firms’
capital structure, riskiness, complexity,
financial activities (including financial
activities of subsidiaries), size, and
other risk-related factors. Moreover,
since the finalization of the 2011 rule,
the agencies have reviewed multiple
resolution plan submissions and have
provided firm-specific feedback and
general guidance to assist the covered
companies in their development of
subsequent resolution plan submissions.
Consequently, covered companies’
submissions and the agencies’ firmspecific feedback and general guidance
have matured over several resolution
plan cycles, and the agencies believe
this is an appropriate time to revise the
2011 rule to reflect improvements
identified since it was originally
adopted, including changes in the
frequency and content of resolution
plans, for the reasons stated in the
proposal and this preamble.11
2019 and 2020 Plans
The agencies received several
comments from covered companies and
industry representatives requesting
clarification regarding resolution plan
filing requirements for 2019 and 2020.
On July 26, 2019, the agencies informed
(1) covered companies with resolution
plans due in December 2019 that their
next resolution plan submission dates
were extended to July 1, 2021 or such
other date that may be specified when
the agencies adopt the final rule and (2)
Barclays PLC, Credit Suisse, Deutsche
Bank AG, and UBS AG that the
informational requirements for their
July 2020 resolution plans may be
limited to changes they have made to
their 2018 resolution plans to address
shortcomings identified in those
resolution plans, and they are required
to submit their next full resolution plans
on July 1, 2021 or such other date that
11 With respect to the timing of these changes, the
agencies also note that, due to the effective date of
section 401 of the EGRRCPA, the agencies believe
it is important to complete revisions to the rule
prior to the date that, pursuant to EGRRCPA, the
resolution plan submission threshold increases to
$250 billion in total consolidated assets.
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may be specified when the agencies
adopt the final rule.12
Firms Subject to Resolution Planning
Requirements
Comments Related to the Corporation’s
IDI Rule
The agencies received several
comments regarding the Board’s
proposed scope of application for the
resolution planning requirement.
Certain commenters supported the
Board’s proposal to rely on the riskbased indicators to identify those firms
with $100 billion or more and less than
$250 billion in total consolidated assets
that would remain subject to resolution
planning requirements under the final
rule. However, some commenters
recommended changes to the manner in
which the risk-based indicators were
proposed to be calculated or
recommended that the Board further
narrow the scope of coverage of the
resolution planning requirement.
Conversely, some commenters asserted
that the proposed scope of coverage
should be expanded so that more firms
would be subject to the resolution
planning requirement.
The agencies received several
comments asserting that the filing cycle
or resolution plan content requirements
under the final rule should align with
the requirements under the
Corporation’s rule requiring certain
insured depository institutions to
submit resolution plans (the IDI rule).13
Some commenters also asserted that
firms should be able to incorporate by
reference information included in a
resolution plan submitted pursuant to
the IDI rule into a resolution plan
submitted pursuant to the final rule. A
commenter stated that the agencies
should harmonize the informational
content requirements for resolution
plans under the final rule with
resolution plans under the IDI rule for
filers subject to Category III standards,
and that doing so would permit these
filers to focus their resolution planning
efforts on a uniform resolution plan
filing process.
The agencies have not modified the
proposal on the basis of these
comments. The agencies note that the
final rule and the IDI rule are separate
requirements with different purposes
and goals, and that the IDI rule is
administered by only the Corporation.
In part because a resolution plan
submitted pursuant to the IDI rule is
submitted to only the Corporation,
incorporating by reference such
information into a resolution plan
submitted pursuant to the final rule is
more challenging than incorporation by
reference of such information into a
resolution plan submitted pursuant to
the IDI rule. The agencies note that the
Corporation has issued an advanced
notice of proposed rulemaking regarding
the IDI rule. That advanced notice of
proposed rulemaking notes, ‘‘[t]o
promote efficiency and reduce burden,
the [Corporation] is encouraging the use
of incorporation by reference to
[resolution plan submissions required
under section 165(d) of the Dodd-Frank
Act] where practicable.’’ 14 As the
Corporation works to amend the IDI
rule, the Corporation will seek to reduce
unnecessary duplication between the
IDI rule and the final rule.
12 See https://www.federalreserve.gov/
newsevents/pressreleases/bcreg20190726a.htm;
https://www.fdic.gov/news/news/press/2019/
pr19069.html.
13 12 CFR 360.10.
14 84 FR 16620, 16625 (April 22, 2019).
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Filing Cycle
The agencies received comments in
support of and opposed to the proposed
filing cycle. Some commenters asserted
that a less-than-annual requirement
would allow sufficient time for covered
companies to integrate firm-specific
feedback, while other commenters
raised concerns that significant changes
to resolvability could occur between
less frequent resolution plan
submissions. Some commenters asserted
that covered companies generally begin
to prepare their resolution plans at least
one year prior to submission and
recommended related changes to the
proposed filing cycle to enhance the
predictability of the timing of producing
a resolution plan. For example, these
commenters asserted that the final rule
should include a formal timeline for the
agencies to provide firm-specific
feedback to covered companies within
one year following a resolution plan
submission and advanced notice
requirements when the agencies require
submission of a full resolution plan or
an interim update, or alter resolution
plan submission dates.
Informational Content
Several commenters asserted that the
proposal should further tailor
informational content requirements
among different categories and types of
covered companies. Some of these
commenters also expressed concern that
certain covered companies within a
category would have general guidance
directed to them that is not appropriate
for their category. Certain other
commenters asserted that the proposed
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59197
targeted resolution plans and reduced
resolution plans would contain
inadequate information. Some
commenters supported the inclusion of
a process by which covered companies
would be able to request waivers from
certain informational content
requirements for their full resolution
plans and asserted that it would help to
streamline resolution plan submissions.
However, some other commenters
opposed the proposed firm-initiated
waiver request process and asserted that
it was unnecessary or would be subject
to abuse by covered companies.
Critical Operations
Numerous commenters asserted that
the proposed timeline for identification
and de-identification of a critical
operation should be modified to provide
covered companies with additional
notice of new identifications prior to a
resolution plan submission date. Some
commenters asserted that the final rule
should automatically exempt from the
requirement to have a process for
identifying critical operations any
covered company that does not
currently have an identified critical
operation.
The comments on the proposed rule
and the agencies’ related responses are
discussed in further detail below.
III. Final Rule
A. Identification of Firms Subject to the
Resolution Planning Requirement and
Filing Groups
1. Firms Subject to the Resolution
Planning Requirement
Following EGRRCPA, three types of
firms are statutorily subject to the
resolution planning requirement:
• U.S. and foreign banking
organizations with $250 billion or more
in total consolidated assets,
• U.S. banking organizations
identified as U.S. GSIBs, and
• Any designated nonbank financial
companies that the Council has
determined under section 113 of the
Dodd-Frank Act should be supervised
by the Board.
As discussed in the proposal,
following EGRRCPA, the Board has the
authority to apply the resolution
planning requirement to firms with
$100 billion or more and less than $250
billion in total consolidated assets.15 In
the proposal, the Board proposed to
apply the risk-based indicators
established in the notices of proposed
rulemaking for the tailoring rules to
15 12 U.S.C. 5365(a); EGRRCPA section
401(a)(1)(B)(iii) (to be codified at 12 U.S.C.
5365(a)(2)(C)). See also EGRRCPA section 401(g).
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identify those U.S. firms with total
consolidated assets equal to $100 billion
or more and less than $250 billion that
would be subject to a resolution
planning requirement. Consistent with
the notices of proposed rulemaking for
the domestic tailoring rule, the Board
proposed to apply resolution planning
requirements to U.S. bank holding
companies with (a) total consolidated
assets equal to $100 billion or more and
less than $250 billion and (b) $75 billion
or more in any of the following riskbased indicators: Cross-jurisdictional
activity, nonbank assets, weighted shortterm wholesale funding, or off-balance
sheet exposure. Consistent with the
notices of proposed rulemaking for the
FBO tailoring rule, the Board proposed
to apply resolution planning
requirements to foreign banking
organizations 16 with (a) total global
assets equal to $100 billion or more and
less than $250 billion, (b) combined
U.S. assets equal to $100 billion or
more, and (c) $75 billion or more in any
of the risk-based indicators measured
based on combined U.S. operations. In
addition, the agencies proposed to use
the risk-based indicators to divide U.S.
and foreign firms into groups for the
purposes of determining the frequency
and informational content of resolution
plan filings.
Foreign banking organizations that are
expected to be triennial reduced filers
Agricultural Bank of China
Australia and New Zealand Banking
Group
Banco Bradesco
Banco De Sabadell
Banco Do Brasil
Banco Santander
16 Consistent with the 2011 rule and the proposal,
for purposes of the final rule, a foreign banking
organization is a foreign bank that has a banking
presence in the United States by virtue of operating
a branch, agency, or commercial lending subsidiary
in the United States or controlling a bank in the
United States; or any company of which the foreign
bank is a subsidiary.
17 Projected categories are based on data for Q1
2019. Actual categories will be based on 4-quarter
averages. For certain measures for foreign banks,
conservative assumptions were used to estimate
incomplete data.
18 Firms subject to Category I standards will be
the U.S. GSIBs. Any future Council-designated
nonbank would file full and targeted plans on a
two-year cycle, unless the agencies jointly
determine the firm should file full and targeted
plans on a three-year cycle.
19 Firms subject to Category II standards will be:
(1) U.S. firms with (a) ≥$700b average total
consolidated assets; or (b) ≥$100b average total
consolidated assets with ≥$75b in average crossjurisdictional activity and (2) foreign banking
organizations (FBOs) with (a) ≥$700b average
combined U.S. assets; or (b) ≥$100b average
combined U.S. assets with ≥$75b in average crossjurisdictional activity.
20 Firms subject to Category III standards will be:
(1) U.S. firms with (a) ≥$250b and <$700b average
total consolidated assets; or (b) ≥$100b average total
consolidated assets with ≥$75b in average total
nonbank assets, average weighted short-term
wholesale funding, or average off-balance sheet
exposure and (2) FBOs with (a) ≥$250b and <$700b
average combined U.S. assets; or (b) ≥$100b average
combined U.S. assets with ≥$75b in average total
nonbank assets, average weighted short-term
wholesale funding, or average off-balance sheet
exposure.
21 Other FBOs subject to resolution planning
pursuant to statute are FBOs with ≥$250b global
consolidated assets that are not subject to Category
II or Category III standards.
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Bank of China
Bank of Communications
Bank of Montreal
Bank of Nova Scotia
Bayerische Landesbank
BBVA Compass
BNP Paribas
BPCE Group
Caisse Federale de Credit Mutuel
Canadian Imperial Bank of Commerce
China Construction Bank Corporation
China Merchants Bank
CITIC Group Corporation
Commerzbank
Commonwealth Bank of Australia
Cooperative Rabobank
Credit Agricole Corporate and
Investment Bank
DNB Bank
DZ Bank
Erste Group Bank AG
Hana Financial Group
Industrial and Commercial Bank of
China
Industrial Bank of Korea
Intesa Sanpaolo
Itau Unibanco
KB Financial Group
KBC Bank
Landesbank Baden-Weurttemberg
Lloyds Banking Group
National Agricultural Cooperative
Federation
National Australia Bank
Nordea Group
Norinchukin Bank
Oversea-Chinese Banking Corporation
Shinhan Bank
Skandinaviska Enskilda Banken
Societe Generale
Standard Chartered Bank
State Bank of India
Sumitomo Mitsui Financial Group
Sumitomo Mitsui Trust Holdings
Svenska Handelsbanken
Swedbank
UniCredit Bank
United Overseas Bank
Westpac Banking Corporation
Woori Bank
In the proposal, the Board noted that
the thresholds and risk-based indicators
identified in the categories were
designed to take into account an
individual firm’s particular activities
and organizational footprint that may
present significant challenges to an
orderly resolution. The Board proposed
to apply a uniform threshold of $75
billion for each of these risk-based
indicators, based on the degree of
concentration this amount would
represent for each firm and the
proportion of the risk factor among all
U.S. firms with $100 billion or more in
total consolidated assets that would be
included by the threshold.
In the proposal, the Board noted that
increased levels of cross-jurisdictional
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activity could increase operational
complexity and that it may be more
difficult to resolve or unwind a firm’s
positions due to the multiple
jurisdictions and regulatory authorities
involved and potential legal or
regulatory barriers to transferring
financial resources across borders.
Similarly, the Board noted that bank
holding companies with significant
nonbank assets would be more likely to
be engaged in activities such as prime
brokerage, or complex derivatives and
capital markets activities. Where a firm
has not engaged in planning to address
these particular challenges, it is less
likely the firm’s resolution would
proceed in an orderly manner without
unduly impacting other firms.
Regarding weighted short-term
wholesale funding, the Board noted that
firms particularly reliant on short-term
funding sources may be more vulnerable
to large-scale funding runs or ‘‘fire sale’’
effects on asset prices and therefore
proposed to continue to apply
resolution planning requirements to
firms with higher levels of potential
liquidity vulnerability, as measured by
the firm’s weighted short-term
wholesale funding. Finally, the Board
noted that where a firm’s activities
result in large off-balance sheet
exposure, the firm may be more
vulnerable to significant draws on
capital and liquidity in times of stress.
The proposal therefore would have
continued to apply resolution planning
requirements to firms with this riskbased indicator.
The agencies received several
comments on the use of the four riskbased indicators and associated
thresholds.22 One commenter reiterated
concerns that it described in its
comment letter on the notices of
proposed rulemaking for the tailoring
rules and stated that its concerns
regarding those notices applied equally
to the proposed rule. Another
commenter expressed general support
for the risk-based indicator approach.
Several commenters recommended
changes to the calibration of U.S. assets
and activity in the risk-based indicators
for foreign banking organizations. One
commenter argued against the inclusion
22 This preamble responds to comments received
on the proposed rule regarding the risk-based
indicators. Responses to comments received on the
notices of proposed rulemaking for the tailoring
rules and additional information concerning the
basis for the risk-based indicators established under
the tailoring rules are included in the notices of
final rulemaking for the tailoring rules. See Board
Final Rule, ‘‘Prudential Standards for Large Bank
Holding Companies, Savings and Loan Holding
Companies, and Foreign Banking Organizations’’
published elsewhere in this issue of the Federal
Register.
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of U.S. branches and agencies in the
calculation of a foreign firm’s combined
U.S. assets or thresholds for risk-based
indicators unless the operations of
branches or agencies are significant to a
critical operation. Instead, the
commenter recommended that riskbased indicators be calculated
consistent with how the strategic
analysis requirements in the 2011 rule
apply to U.S. branches, agencies, and
offices. Another commenter argued
against the use of U.S. branch assets in
determining activity in risk-based
indicators because branches are discrete
entities from the U.S. intermediate
holding companies and often have more
stable funding.
The resolution planning requirement
currently applies to a foreign banking
organization’s entire U.S. operations,
including U.S. branches and agencies.
U.S. branches and agencies constitute a
significant share of these foreign
banking organizations’ presence in the
United States. In addition, the agencies’
experience reviewing resolution plans
demonstrates that there are
interconnections and dependencies
between a foreign firm’s U.S. branches,
agencies, and offices and its U.S.
subsidiaries, core business lines, and
critical operations. The commenters’
proposals to exclude certain U.S.
branches, agencies, and offices from the
calculation of the risk-based indicators
or combined U.S. operations would not
be consistent with the objective of
measuring the full scope of potential
risks to U.S. financial stability,
including risks associated with
operational complexity. Moreover, it is
appropriate to tailor resolution planning
requirements based on the size and
complexity of a foreign firm’s entire
U.S. operations because the resolution
planning requirement applies to a firm’s
entire U.S. operations. Accordingly,
under the final rule, risk-based
indicators and combined U.S.
operations would be measured as
proposed, including a foreign firm’s
U.S. branches, agencies, and offices.
Two commenters expressed concerns
with the use of asset thresholds to
determine a firm’s category unless the
asset threshold is indexed to inflation or
total U.S. banking assets. As further
explained in the notices of final
rulemaking for the tailoring rules, the
$100 billion and $250 billion size
thresholds prescribed in the Dodd-Frank
Act, as amended by EGRRCPA, are fixed
by statute.23 Indexing the other
23 Section 165 of the Dodd-Frank Act does
provide the Board with discretion to establish a
minimum asset threshold above the statutory
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thresholds would add complexity, a
degree of uncertainty, and potential
discontinuity to the framework. The
Board acknowledges the thresholds
should be reevaluated over time to
ensure they appropriately reflect growth
on a macroeconomic and industry-wide
basis, as well as to continue to support
the objectives of the final rule. The
Board plans to accomplish this by
periodically reviewing the thresholds
under the tailoring rules and proposing
changes through notice and comment
process, rather than including an
automatic adjustment of thresholds
based on indexing.
Several commenters discussed the
criteria for being subject to Category II
standards. Two commenters supported
the calibration of these criteria as
proposed and asserted that no
additional risk-based indicators should
be used to determine whether a firm
would be subject to Category II
standards. These commenters opposed
the use of additional risk-based
indicators (e.g., weighted short-term
wholesale funding, nonbank assets, or
off balance-sheet exposure) and stated
that such indicators would only be
appropriate if the threshold were set to
$210 billion. Another commenter stated
that the criteria for being subject to
Category II standards should not be
based on exceeding the threshold for
cross-jurisdictional activity only.
As further explained in the notices of
final rulemaking for the tailoring rules,
significant cross-border activity can
indicate heightened interconnectivity
and operational complexity. Crossjurisdictional activity can add
operational complexity in normal times
and complicate the ability of a firm to
undergo an orderly resolution in times
of stress, generating risks to financial
stability in the United States. In
addition, cross-jurisdictional activity
may present increased challenges in
resolution because there could be legal
or regulatory restrictions that prevent
the transfer of financial resources across
borders where multiple jurisdictions
and regulatory authorities are involved.
The cross-jurisdictional activity
indicator and threshold is intended to
identify firms with significant crossborder activities. Accordingly, the
tailoring rules apply Category II
standards to domestic and foreign
banking organizations with crossjurisdictional activity of $75 billion or
more.
thresholds for some, but not all, enhanced
prudential standards. However, the Board may only
utilize this discretion pursuant to a
recommendation by the Financial Stability
Oversight Council in accordance with section 115
of the Dodd-Frank Act. 12 U.S.C. 5365(a)(2)(B).
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Alternative Scoping and Tailoring
Criteria
In the proposal, the Board also
proposed an alternative approach for
assessing the risk profile and systemic
footprint of a U.S. banking organization
and of a foreign banking organization’s
combined U.S. operations or U.S.
intermediate holding company: Using a
single, comprehensive score. The Board
uses an identification methodology
(scoring methodology) to identify a U.S.
bank holding company as a U.S. GSIB
and apply risk-based capital surcharges
to these firms. The Board proposed
using the same scoring methodology to
determine whether to apply the
resolution planning requirements to
firms with $100 billion or more and less
than $250 billion in total consolidated
assets.24 The agencies also proposed
using this same scoring methodology to
divide U.S. and foreign firms into
groups to determine the frequency and
informational content of resolution plan
filings.
One commenter directed agency staff
to comments on the alternative scoping
criteria in relation to the notices of
proposed rulemaking for the tailoring
rules. The comment generally expressed
support for the risk-based indicator
methodology rather than the alternative
methodology, which the commenter
described as flawed conceptually and in
calibration.
Under the tailoring rules, the Board
finalized an indicators-based approach
for applying Category II, III, or IV
standards to the firms, as this approach
provides a simple framework that
supports the objectives of risk
sensitivity and transparency. To
determine whether a firm with total
consolidated assets equal to $100 billion
or more and less than $250 billion is
subject to resolution planning
requirements, the Board is finalizing the
same indicators-based approach,
requiring any such firm that is subject
to Category II or III standards to submit
resolution plans. As under the proposal,
and as further described below, the
agencies are similarly finalizing the
indicators-based approach for
determining the scope of resolution
planning requirements for firms other
24 As discussed in further detail in the proposal,
the scoring methodology in the Board’s regulations
that is used to calculate a U.S. GSIB’s capital
surcharge includes two methods (12 CFR part 217,
subpart H). The first method is based on the sum
of a firm’s systemic indicator scores reflecting its
size, interconnectedness, cross-jurisdictional
activity, substitutability, and complexity (method
1). The second method is based on the sum of these
same measures of risk, except that the
substitutability measures are replaced with a
measure of the firm’s reliance on short-term
wholesale funding (method 2).
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than the U.S. GSIBs and nonbank
financial companies supervised by the
Board. The Board will continue to use
the scoring methodology to apply
Category I standards to a U.S. GSIB and,
as under the proposal, the final rule
relies on this identification for
determining the scope of resolution
planning requirements for these firms.
U.S. Covered Companies With $100
Billion or More and Less Than $250
Billion in Total Consolidated Assets
Under the proposed rule, resolution
planning requirements would not have
applied to U.S. firms with total
consolidated assets of $100 billion or
more and less than $250 billion whose
activities did not exceed the threshold
for any of the risk-based indicators (i.e.,
cross-jurisdictional activity, nonbank
assets, weighted short-term wholesale
funding, or off-balance-sheet exposure).
In the proposal, the Board noted that it
was less likely that one of these firms’
failure would present a risk of serious
adverse effects on U.S. financial
stability and that requiring a plan for
rapid and orderly resolution in
bankruptcy from such a firm may
impose burden without sufficient
corresponding benefit.
The Board received several comments
on this aspect of the proposal. One
commenter expressed support for not
applying the resolution planning
requirements to U.S. firms subject to
Category IV standards. Other
commenters stated that the Board
should apply resolution planning
requirements to all firms with $100
billion or more and less than $250
billion in total consolidated assets. A
further commenter expressed concern
that the proposal would not apply
resolution planning requirements to any
firm with less than $250 billion in total
consolidated assets. The commenter
asserted that, instead, resolution
planning should be required for all
firms with more than $100 billion in
total consolidated assets because the
Corporation’s resolution authority under
the Federal Deposit Insurance Act does
not extend beyond a covered company’s
insured depository institution
subsidiary, and that the resolution plan
process under the final rule should be
coordinated with the IDI rule. Another
commenter expressed concerns about
removing the resolution planning
requirements for large regional banks,
asserting that the agencies did not
explain sufficiently the rationale for
removing the requirement for U.S. firms
subject to Category IV standards.
The Board is finalizing this aspect of
the proposal as proposed. In response to
comments on this aspect of the final
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rule, the Board notes that the proposal
and final rule would continue to apply
resolution planning requirements to
some firms with $100 billion or more
and less than $250 billion in total
consolidated assets.25 As explained
above, the final rule relies on the riskbased indicators to apply resolution
planning requirements to firms in this
group. The Board believes the risk-based
indicators are an effective means for
identifying those firms with total
consolidated assets of $100 billion or
more and less than $250 billion whose
material financial distress or failure
would pose a threat to U.S. financial
stability, for the reasons described
above, in the proposal, and in the
proposed and final tailoring rules.
Where a firm’s activities in one or more
of the risk-based indicators exceed the
$75 billion threshold, it is more likely
that its failure could adversely affect
U.S. financial stability; accordingly, the
firm should be subject to resolution
planning requirements. However, when
a firm’s activities do not exceed one or
more of the risk-based indicators and its
total consolidated assets are less than
$250 billion, it is less likely that the
firm’s failure would have serious
adverse effects on U.S. financial
stability and, accordingly, to impose
resolution planning requirements on
such a firm would not yield a sufficient
corresponding benefit.
Foreign-Based Covered Companies With
$100 Billion or More and Less Than
$250 Billion in Total Global Assets
In the proposal, the Board proposed
applying resolution planning
requirements to foreign banking
organizations with (a) total global assets
equal to $100 billion or more and less
than $250 billion, (b) combined U.S.
assets equal to $100 billion or more, and
(c) $75 billion or more in any of the
following risk-based indicators
measured based on combined U.S.
operations: Cross-jurisdictional activity,
nonbank assets, weighted short-term
wholesale funding, or off-balance-sheet
exposure. The Board noted in the
proposal that it would no longer require
resolution plan submissions from
foreign banking organizations with total
global assets equal to $100 billion or
more and less than $250 billion where
(a) the firm has combined U.S. assets
below $100 billion or (b) the firm does
not have $75 billion or more in any of
25 For this purpose, total consolidated assets are
determined under the tailoring rules. Accordingly,
a firm has total consolidated assets of $100 billion
or more if the average of its total consolidated assets
as reported on multiple regulatory reports, as
specified in the tailoring rules, is $100 billion or
more.
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the risk-based indicators measured
based on combined U.S. operations.
One commenter asserted that
resolution planning requirements
should be eliminated entirely for foreign
firms with limited U.S. operations,
regardless of their total global asset size,
or, in the alternative, resolution
planning requirements should apply to
a foreign firm subject to Category IV
standards only if it is a global
systemically important financial
institution. The commenter asserted that
foreign firms should also be permitted
to comply with resolution planning
requirements pursuant to the final rule
by certifying compliance with the home
country resolution requirements.
The Board is finalizing this aspect of
the proposal as proposed. The Board
notes that the Dodd-Frank Act, as
amended by EGRRCPA, requires all
foreign banking organizations with $250
billion or more in total global assets to
submit resolution plans, and a
certification of home country
compliance by itself would not satisfy
this statutory standard. Moreover, as
explained above, the Board believes that
the risk-based indicators are an effective
means for identifying those firms that
should be subject to resolution planning
requirements due to the potential effect
on U.S. financial stability of their
financial distress or failure.
Exiting Covered Company Status
The proposal would have updated the
methodology for ascertaining when a
firm ceased to be a covered company.
With respect to a decrease in assets,
under the proposal, a U.S. firm would
have ceased to be a covered company
when its total consolidated assets are
less than $250 billion based on total
consolidated assets for each of the four
most recent calendar quarters (and it is
not otherwise subject to Category II or
Category III standards based on the riskbased indicators identified above). A
foreign banking organization that files
quarterly reports on Form FR Y–7Q
similarly would have been assessed on
the basis of its total global assets for
each of the four most recent calendar
quarters. A foreign banking organization
that files the Y–7Q report annually
rather than quarterly would have been
assessed based on its total global assets
over two consecutive years. The
agencies would have retained the
discretion to jointly determine that a
firm is no longer a covered company at
an earlier time than it would be
pursuant to its quarterly or annual
reports. Under the proposal, firms that
would have ceased to be, or to be treated
as, bank holding companies or that were
de-designated by the Council for
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59201
supervision by the Board would no
longer have been covered companies
and would not have had any further
resolution planning requirements as of
the effective date of the applicable
action unless there were a subsequent
change to their status. The agencies
received no comments on this aspect of
the proposal and are finalizing it as
proposed, but have clarified in the final
rule that a firm’s total consolidated
assets are determined on the basis of
total consolidated assets as reported on
each of its four most recent quarterly
reports or two most recent annual
reports.
2. Filing Groups and Filing Cycle
The proposal would have divided
covered companies into three groups of
filers: (a) Biennial filers; (b) triennial
full filers; and (c) triennial reduced
filers. Under the proposal, all covered
companies would have had a July 1
submission date, instead of the current
division between July 1 and December
31.
The agencies received comments
offering general support for the longer
filing cycle and asserting that it would
allow filers sufficient time to consider
firm-specific feedback. The agencies
also received comments suggesting that
the current annual filing requirement be
retained to reflect the potential for rapid
changes to firms’ structure and financial
condition that may cause resolution
plans to become outdated.
The agencies note that the annual
submission requirement has been a
challenging constraint for both the firms
and the agencies. The annual
requirement did not provide sufficient
time for the agencies to review the
resolution plans and develop useful
firm-specific feedback or general
guidance, and for the firms to consider
that firm-specific feedback or general
guidance in their next resolution plan
submissions. Independent of the
proposal, the agencies have extended
the resolution plan filing deadlines over
the past few submission cycles to
provide at least two years between
resolution plan submissions.
Accordingly, the agencies are finalizing
an extended filing cycle, consistent with
the proposal and described in more
detail below.
The agencies received one comment
regarding the proposal to move the
submission date to July 1 for all filers.
The commenter suggested that the 2011
rule’s December 31 submission date be
retained for triennial full filers subject
to Category III standards as this would
allow more efficient allocation of
resources for resolution planning and
other supervisory activities. The
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agencies are finalizing the July 1
submission date as proposed. Having
one resolution plan submission date
will simplify administration of the final
rule for filers and the agencies, such as
when filers change filing groups.
Biennial Filers
In the proposal, the biennial filers
would have comprised firms subject to
Category I standards, or the U.S. GSIBs,
as well as any nonbank financial
company supervised by the Board that
has not been jointly designated as a
triennial full filer by the agencies. The
agencies noted that any such
designation of a nonbank financial
company would be made taking into
account the relevant facts and
circumstances, including the degree of
systemic risk posed by the particular
covered company’s failure.
Since the failure of a firm in this
group would pose the most serious
threat to U.S. financial stability, the
proposal would have applied the most
stringent resolution planning
requirements to biennial filers in terms
of both submission frequency and
informational content. Under the
proposed rule, the biennial filers would
have been required to submit a
resolution plan every two years,
alternating between a full resolution
plan, subject to the waiver option, and
a targeted resolution plan. The agencies
noted that the U.S. GSIBs’ resolution
plans had matured over time and these
firms had taken meaningful steps to
develop the foundational capabilities
necessary for the implementation of
their resolution strategies. In addition,
in recent years, the agencies have
provided extensions under the 2011 rule
to provide the biennial filers with two
years between resolution plan
submissions, so formalization of a twoyear cycle would be consistent with
established practice.
The agencies received two comments
on this aspect of the proposal. One
commenter stated that the U.S. GSIBs
should be required to submit full
resolution plans every two years.
Another commenter expressed general
opposition to the two-year cycle and
asserted that it would be insufficient to
capture important information about
firms’ resolvability due to the speed
with which changes can occur.
The agencies are finalizing this aspect
of the proposal as proposed. After
several rounds of resolution plans, firmspecific feedback, and general guidance,
the U.S. GSIBs’ resolution plans have
matured over time, making more
frequent submissions generally
unnecessary. In addition, experience
under the 2011 rule has shown that an
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annual resolution plan submission
schedule is too challenging a constraint
for the reasons described above. The
agencies note, however, that they retain
the ability under the final rule to obtain
key information between resolution
plan submissions, including by
requiring interim updates and receiving
notices of extraordinary events, which
will allow the agencies to remain
informed of material developments
affecting resolvability notwithstanding
the less frequent filing cycle. The
agencies also will have authority to
require a full resolution plan instead of
a targeted resolution plan and to move
a resolution plan submission date.
Triennial Full Filers
The proposal identified the second
filing group, triennial full filers, as firms
subject to Category II or III standards
under the notices of proposed
rulemaking for the tailoring rules, as
well as any nonbank financial company
supervised by the Board that was
designated as a triennial full filer by the
agencies.
The agencies proposed that triennial
full filers be on a three-year filing cycle
rather than a two-year filing cycle
because the failure of a triennial full
filer would generally be less likely to
pose a threat to U.S. financial stability
as compared to the failure of a biennial
filer. The proposal would have required
triennial full filers to submit a
resolution plan every three years,
alternating between a full resolution
plan and a targeted resolution plan.
The agencies received several
comments on the proposed three-year
filing cycle for triennial full filers. One
commenter expressed support for the
proposed three-year cycle, and
alternating between full and targeted
resolution plans for firms subject to
Category III standards. Another
commenter stated that these firms
should be on a biennial schedule,
alternating between full and targeted
resolution plans. One commenter
expressed general opposition to the
three-year cycle and asserted that it
would be insufficient to capture
important information about firms’
resolvability due to the speed at which
change can occur. Another commenter
stated that firms that would be triennial
full filers under the proposal should be
allowed to submit targeted resolution
plans every three years, absent an
extraordinary event.
The agencies are finalizing as
proposed the three-year cycle for
triennial full filers, alternating between
full and targeted resolution plans. While
the failure of a firm in this group could
threaten U.S. financial stability, such
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failure is less likely to threaten U.S.
financial stability as compared to the
failure of a biennial filer. Accordingly,
it is appropriate to tailor this group’s
requirements relative to the
requirements for biennial filers. Given
these firms’ size and complexity, the
agencies have determined that a
triennial schedule is appropriate. In
addition, as with biennial filers, the
agencies would retain authority to
require interim updates and full
resolution plans, and to move resolution
plan submission dates, and firms would
be required to submit notices of
extraordinary events, which would
allow the agencies to remain informed
of material developments affecting
resolvability that occur between
resolution plan submissions.
The agencies are not adopting
commenters’ recommendation to limit
all resolution plan submissions from
triennial full filers to targeted resolution
plans absent an extraordinary event
because the agencies believe that, given
the potential risks inherent in firms in
this group and because firms and
markets change over time, it is
appropriate for these firms to submit a
full resolution plan at least every six
years. In addition, the agencies note that
a firm may apply for a waiver from
certain informational content
requirements in its full resolution plan
and incorporate by reference
information in a prior submission that
remains accurate in all respects that is
material to the covered company’s
resolution plan, as described further
below. These aspects of the final rule
should appropriately tailor the burden
of preparing a full resolution plan.
In the proposal, the agencies also
noted that the proposed triennial full
filer group would have included foreign
banking organizations that had
previously received detailed general
guidance from the agencies.26 These
firms have taken important steps to
enhance their resolvability and facilitate
their orderly resolution in bankruptcy
and have significantly reduced the size
and risk profiles of their U.S. operations
since the passage of the Dodd-Frank Act
and in response to the implementation
of Regulation YY,27 although the failure
of one of these firms could potentially
pose a threat to U.S. financial stability.
The agencies stated that it was
appropriate that these firms be part of
26 See, e.g., Guidance for 2018 § 165(d) Annual
Resolution Plan Submissions By Foreign-based
Covered Companies that Submitted Resolution
Plans in July 2015, https://www.federalreserve.gov/
newsevents/pressreleases/files/
bcreg20170324a21.pdf, https://www.fdic.gov/
resauthority/2018subguidance.pdf.
27 12 CFR part 252.
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the triennial full filer group and submit
resolution plans on the three-year filing
cycle because the preferred outcome for
each of these foreign banking
organizations is a successful home
country resolution using a single point
of entry resolution strategy, not the
resolution strategy described in its U.S.
resolution plan.
The agencies received one comment
on this aspect of the proposal. The
commenter asserted that the largest and
most complex foreign banking
organizations should submit resolution
plans every two years, alternating
between full and targeted resolution
plans, because they pose similar risks to
the U.S. financial system as the risks
posed by the U.S. GSIBs. The
commenter also stated that the rationale
that these firms would be resolved
through a home country single point of
entry strategy was not compelling
because the purpose of the resolution
planning requirement is to plan for the
failure of a U.S. entity.
The agencies note that the U.S.
footprints of the larger and more
complex foreign banking organizations
are significantly smaller than those of,
and do not present the same
complexities as, the U.S. GSIBs.
Consequently, while the failure of these
operations may threaten the U.S.
financial system, it is less likely than
the failure of a U.S. GSIB, regardless of
whether the global firm executes its
preferred resolution strategy
successfully. Accordingly, the agencies
believe that a longer filing cycle is
appropriate for these firms and are
finalizing this aspect of the proposal as
proposed.
Triennial Reduced Filers
The proposal identified a third group,
triennial reduced filers, which would
have consisted of any covered company
that was not subject to Category I, II, or
III standards and was not a nonbank
financial company supervised by the
Board. The proposal would have
applied less stringent resolution
planning requirements to firms in this
group because they do not have the
same size or complexity as firms that
would have been subject to Category I,
II, or III standards. Under the proposal,
triennial reduced filers would have been
required to submit reduced resolution
plans every three years. The proposal
also would have required a new
triennial reduced filer to submit a full
resolution plan as its initial submission
and thereafter a reduced resolution plan
every three years.
The agencies received one comment
on this aspect of the proposal. The
commenter asserted that some of the
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larger triennial reduced filers should be
on a biennial schedule, alternating
between full and targeted resolution
plans, and supported applying a longer
filing cycle to the U.S. operations of
certain smaller foreign firms.
The agencies are finalizing the
triennial reduced filer group and related
filing cycle as proposed. Given the
limited scope of these firms’ U.S.
operations and activities, the agencies
have determined that it is appropriate
for triennial reduced filers to submit
reduced resolution plans on a three-year
cycle; this requirement will
appropriately tailor burden for these
firms while ensuring that the agencies
remain apprised of changes that could
materially affect the firms’ resolvability
or resolution strategies. In addition, the
failure of the U.S. operations of one of
these firms may threaten the U.S.
financial system, but failure of these
operations poses a lower risk than the
failure of a biennial filer or triennial full
filer. Nonetheless, the agencies retain
the ability to obtain additional
information between resolution plan
submissions, as mentioned above, and
to require any firm to submit a full
resolution plan, as described below.
Moving Submission Dates, Changing
Plan Content, and Requiring Interim
Updates
The proposal would have provided
the agencies the flexibility to move
covered companies’ submission dates.
The proposal would have required the
agencies to notify a covered company
that had previously submitted a
resolution plan at least 180 days prior
to the new submission date. A new
covered company would have received
at least 12 months’ notice prior to the
new submission date. Consistent with
the 2011 rule, the proposal also would
have allowed agencies to require
covered companies to provide interim
updates within a reasonable amount of
time. In addition, the proposal would
have allowed the agencies to jointly
require that a covered company submit
a full resolution plan within a
reasonable period of time.
The agencies received several
comments on these aspects of the
proposal. Commenters asserted that the
final rule should provide a minimum of
12 months’ notice prior to requiring a
full resolution plan or an off-cycle
submission and six or 12 months’ notice
prior to an interim update. Commenters
also asserted that the agencies should
clarify that a ‘‘reasonable amount of
time’’ for prior notice of a full resolution
plan submission would be at least 12
months’ notice. These commenters
generally asserted that their proposed
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notice periods are necessary to provide
covered companies with sufficient time
to prepare their resolution plans.
The final rule contains certain
changes from the proposal in response
to these commenters. Under the final
rule, the agencies will provide at least
12 months’ notice prior to requiring a
full resolution plan submission or an
off-cycle submission (i.e., a submission
on a date other than the regularly
scheduled date for the covered
company’s filing group).28 The agencies
believe that these changes will enhance
the predictability of resolution plan
submission dates, provide appropriate
time for resolution plan preparation,
and help facilitate covered companies’
resource allocation decisions.
Consistent with the proposal and the
2011 rule, the final rule provides that
the agencies may require a covered
company to submit an interim update
within a reasonable amount of time, as
jointly determined by the agencies. An
interim update is intended to be a
flexible tool for the agencies to obtain
information between resolution plan
submission dates. When requiring an
interim update, the agencies will specify
the portions or aspects of a previously
submitted resolution plan that a firm is
required to update. Accordingly, the
informational content requirements for
an interim update are not fixed, making
it difficult to identify a specific period
that is necessary to prepare every
interim update. While a six- or 12month period may be appropriate in
certain circumstances, a shorter time
period may be appropriate in other
circumstances, especially where an
interim update would contain only
limited information. Accordingly, the
agencies do not believe that it would be
appropriate to introduce a fixed notice
period for an interim update.
The final rule provides that the
agencies may require a covered
company to submit a full resolution
plan instead of a targeted or reduced
resolution plan that the covered
company is otherwise required to
submit. The full resolution plan’s
submission date will be the submission
date for the replaced targeted or reduced
28 If the agencies were to require an off-cycle
submission from a covered company, the covered
company’s next resolution plan submission date
after the off-cycle submission date would be
determined based on the off-cycle submission date.
For example, if the agencies were to move a
triennial full filer’s submission date from July 1,
2027 to July 1, 2026, the covered company’s next
resolution plan submission date after July 1, 2026
would be July 1, 2029 (absent the agencies jointly
moving the July 1, 2029 submission date). The
agencies will consider the impact on the covered
company’s future resolution plan submission dates
and any deadlines related to those submission dates
when requiring an off-cycle submission.
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resolution plan.29 The submission of
such a full resolution plan will not
change the type of resolution plan that
the covered company is otherwise
thereafter required to submit.
The agencies do not expect to
regularly exercise this authority.
However, it may be necessary to require
a full resolution plan instead of a
targeted or reduced resolution plan
under unusual circumstances, and the
agencies have preserved this authority
as a means for the agencies to receive
additional information from firms when
appropriate. The agencies could, for
example, exercise their discretion to
require a triennial reduced filer whose
activities have evolved gradually (rather
than as the result of a single material
event) to submit full resolution plan in
lieu of a reduced resolution plan if the
aggregate effect of those changes might
meaningfully increase the risk that the
firm’s failure could have serious adverse
effects on U.S. financial stability.
B. Resolution Plan Content
1. General Guidance and Firm-Specific
Feedback
The preamble to the proposal
specified that general guidance
previously directed to specific full
resolution plan filers concerning the
content of their upcoming submissions
would continue to be directed to those
individual firms.
The agencies received several
comments related to prior resolution
planning general guidance and firmspecific feedback. Some commenters
suggested that existing resolution
planning general guidance directed to
some firms should be consolidated and
tailored among the different categories
of firms, that any future general
guidance be subject to notice and public
comment, and that the agencies commit
to providing firm-specific feedback on
resolution plans and any general
guidance no later than 12 months prior
to a covered company’s resolution plan
submission date. These commenters
asserted in particular that covered
companies subject to Category II or III
standards should not receive general
guidance that is similar to the general
guidance that is directed to the U.S.
GSIBs, which are subject to Category I
standards. A few commenters suggested
that the agencies clarify to whom
existing general guidance is directed,
29 Accordingly, a firm could be required to submit
a full resolution plan while the other members of
the firm’s filing group are required to submit
targeted or reduced resolution plans on that
submission date. Thereafter, the firm that was
required to submit a full resolution plan will revert
to its filing group’s regular resolution plan type
submission schedule.
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and one commenter suggested
incorporating existing general guidance
into the final rule.
The final rule provides that, absent
extenuating circumstances, the agencies
will provide a firm with notice of any
deficiency or shortcoming identified by
the agencies and any other firm-specific
feedback regarding its resolution plan
no later than 12 months after the later
of (1) the date when the firm submitted
the resolution plan and (2) the date by
which the firm was required to submit
the resolution plan. The agencies
recognize firms’ strong interest in
prompt firm-specific feedback from the
agencies and in having sufficient time to
respond thereto, and would expect to
exercise their authority to provide such
notice after the one-year period only
when providing the notice within a year
would be impractical due to
circumstances outside the agencies’
control. Absent extenuating
circumstances, this approach will
provide a firm with at least one year to
consider any and all firm-specific
feedback before it is next required to
submit a resolution plan. However, the
agencies would retain the authority to
require a firm to submit within a shorter
period a revised resolution plan that
addresses deficiencies or an interim
update.
In addition to firm-specific feedback
that provides the agencies’ views on a
particular resolution plan,30 the
agencies may continue to issue general
guidance regarding future resolution
plan submissions. The firm-specific
feedback letters sent to-date to firms are
examples of the firm-specific feedback
that the agencies will provide to firms
within the 12-month period described
in the previous paragraph. While both
firm-specific feedback (other than a
notice of a deficiency) and general
guidance are meant to assist firms in
preparing future resolution plans,
general guidance outlines the agencies’
expectations or priorities and articulates
the agencies’ general views regarding
resolution plans more generally than
firm-specific feedback, which presents
the agencies’ views on a particular
resolution plan. The agencies will strive
to provide final general guidance at least
a year before the next resolution plan
submission date of firms to which the
general guidance is directed.
Existing general guidance, including
its content and scope, is not modified by
30 The agencies may provide the same or
substantially similar firm-specific feedback to more
than one firm. For example, some elements of firmspecific feedback provided to the U.S. GSIBs may
be the same or substantially similar when certain
aspects of their resolution plans are substantially
similar.
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the final rule. Accordingly, the detailed
general guidance that certain foreign
banking organizations have received
from the agencies (FBO guidance) 31
continues to be directed to only those
firms and is not directed to all triennial
full filers as a result of the changes from
the 2011 rule reflected in the final rule.
Likewise, general guidance directed to
certain domestic banking organizations
(domestic guidance) 32 continues to be
directed to only those domestic banking
organizations to which it was directed
prior to adoption of the final rule.
Because general guidance sets forth nonbinding expectations as opposed to rulebased requirements, the agencies do not
believe that it is necessary or
appropriate to incorporate all general
guidance into the final rule.
The agencies sought and received
public comment on the domestic
guidance in 2018. The notice and
comment process allowed the agencies
to gain valuable insight, which led to
improvements and clarifications in the
final domestic guidance. Similar to the
domestic guidance, the agencies intend
to consolidate and request public
comment in the near future on all
aspects of the FBO guidance, including
the informational content expectations
and the subset of firms to which it is
directed. The agencies expect that this
process will lead to similar benefits for
the FBO guidance. Similarly, the
agencies intend to make any future
general guidance concerning resolution
planning available for public comment,
and will endeavor to finalize any such
general guidance at least one year prior
to the submission date for the first
resolution plan submission to which it
would apply. The agencies will
continue to provide firm-specific
feedback on resolution plan
submissions without first making that
firm-specific feedback available for
notice and comment.
2. Material Changes and Extraordinary
Events
The proposal would have revised and
clarified the requirements for filing a
notice of material events to reflect the
creation of a material changes
definition. A material change would
have been defined as any event,
31 See Guidance for 2018 § 165(d) Annual
Resolution Plan Submissions By Foreign-based
Covered Companies that Submitted Resolution
Plans in July 2015, https://www.federalreserve.gov/
newsevents/pressreleases/files/
bcreg20170324a21.pdf, https://www.fdic.gov/
resauthority/2018subguidance.pdf.
32 See Guidance for § 165(d) Resolution Plan
Submissions by Domestic Covered Companies
applicable to the Eight Largest, Complex U.S.
Banking Organizations, 84 FR 1438, 1449 (February
4, 2019).
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occurrence, change in conditions or
circumstances, or other change that
results in, or could reasonably be
foreseen to have a material effect on the
resolvability of the covered company,
the covered company’s resolution
strategy, or how the covered company’s
resolution strategy is implemented. Full,
targeted, and reduced resolution plans
would have been required to include
information about material changes
since a covered company’s previously
submitted resolution plan and changes
the covered company made to its
resolution plan in response.
Because of the broad definition of
‘‘material change,’’ the agencies
determined that a notice requirement
triggered by the occurrence of a material
change between resolution plan
submissions was not appropriate and
instead proposed the concept of an
extraordinary event, which would have
required such a notice. Under the
proposed rule, a material merger,
acquisition of assets or other similar
transaction, or a fundamental change to
a covered company’s resolution strategy
would have been an extraordinary event
requiring notice to the agencies between
resolution plan submissions.
One commenter supported the
inclusion in the proposal of the terms
‘‘material change’’ and ‘‘extraordinary
event,’’ while another commenter
expressed concern that the proposal put
too much reliance on firms selfidentifying material changes.
The final rule includes the proposed
provisions regarding ‘‘material
changes’’ 33 and ‘‘extraordinary events,’’
with the clarification that a notice
related to an extraordinary event must
describe the event and explain how the
event affects the resolvability of the
firm. The agencies believe that firms can
effectively identify these types of
events, and note that the rule’s
33 As noted in the proposal, such changes include
the identification of a new critical operation or core
business line; the identification of a new material
entity or the de-identification of a material entity;
significant increases or decreases in the business,
operations, or funding of a material entity; or
changes in the primary regulatory authorities of a
material entity or the covered company on a
consolidated basis. Other such changes include
material changes in operational and financial
interconnectivity, both those that are intra-firm and
external. Examples of such operational
interconnectivity include reliance on affiliates for
access to key financial market utilities or critical
services, or significant reliance on the covered
company by other firms for certain Payments,
Clearing, and Settlement (PCS) services, including
agent bank clearing or nostro account clearing, or
government securities settlement services.
Examples of such financial interconnectivity
include a material entity becoming reliant on an
affiliate as a source for funding or collateral, or the
covered company becoming a major over-thecounter derivatives dealer.
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requirement that the board of directors
(or delegee in the case of a foreign firm)
approve each resolution plan should
help ensure that firms take appropriate
steps to identify material changes. In
addition, the final rule has been revised
from the proposal to require that a firm
affirmatively state in its resolution plan
that no material change has occurred
since its prior resolution plan
submission if the resolution plan does
not identify any material changes. The
agencies believe that this clarification
will further help to ensure that firms
give due attention to the requirement to
identify material changes.
3. Full Resolution Plans
The proposal would not have
generally modified the components or
informational content requirements of a
full resolution plan. Through numerous
resolution plan submissions, the
agencies and firms have gained
familiarity with the format and content
of the information required to be
submitted pursuant to the 2011 rule.
The agencies also recognize the utility
of the existing informational content
requirements for full resolution plans.
Focus on these items has facilitated
resolution plan and resolvability
improvements, particularly by the
largest and most complex firms.
Several commenters suggested that
the proposal tailor the full resolution
plan informational content requirements
between categories of firms, as well as
among domestic and foreign firms based
on their relative risk to U.S. financial
stability. One commenter suggested that
the contents of a full resolution plan
should be further tailored for foreign
firms, focus on critical operations in the
United States, and include U.S.
branches in the firm’s strategic analysis
only if they are significant to a critical
operation. The commenter also
suggested that the agencies should
revise the definition of ‘‘covered
company’’ to clarify that the strategy for
a foreign firm need only focus on
resolution of its U.S. core business lines,
critical operations, and material entities.
The commenter also suggested that the
agencies confirm that foreign firms that
have filed resolution plans under the
2011 rule will not be subject to
requirements that impose greater
burdens than applied previously, and
that any new requirements be based on
the occurrence of extraordinary events.
The agencies are not changing the
informational content requirements of a
full resolution plan in the final rule
from the proposal, other than requiring
an affirmation that no material change
has occurred, if applicable. With respect
to differentiation of requirements
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between domestic and foreign firms,
section ll.5(a) of the final rule
appropriately distinguishes between
informational content requirements for
domestic firms and foreign firms by
focusing foreign firms’ resolution plans
on information related to their U.S.
operations, consistent with the 2011
rule. The agencies do not believe that it
is appropriate to limit resolution plan
content to operations that are related to
a critical operation because the DoddFrank Act’s resolution planning
requirement requires firms to plan
generally for their rapid and orderly
resolution. Similarly, nothing in the
Dodd-Frank Act suggests that branches
should be categorically excluded as
suggested. However, the agencies note
that, consistent with the 2011 rule, the
final rule limits the strategic analysis
requirements relating to material
entities that are subject to an insolvency
regime other than the Bankruptcy Code
(including branches) by allowing
covered companies to exclude such
entities from their strategic analysis
unless the entities have $50 billion or
more in total assets or conduct a critical
operation. The agencies have found this
limitation to appropriately capture the
need for information about material
entities that may affect U.S. financial
stability and accordingly are retaining it
under the final rule.
Although the informational content
requirements for resolution plans are
not differentiated among filing groups in
the final rule, the firm-initiated waiver
request process will enable further
tailoring of the informational content
requirements of full resolution plans
based on the attributes and risks posed
by a particular covered company and
the content of firms’ most recent
submissions. In addition, the agencies
will retain the authority to tailor
informational content requirements
through waivers on the agencies’ own
initiative and will continue to
communicate their tailored expectations
for individual firms’ resolution plans
through firm-specific feedback.
Moreover, as explained in more detail
below, under the final rule the firminitiated waiver request process would
be available only to triennial full filers
and triennial reduced filers. As a result,
the final rule would keep in place all
informational content requirements for
biennial filers’ full resolution plans
unless the agencies grant a waiver on
their own initiative. As explained
below, this change to the process for
covered companies to request waivers
reflects that among all categories of
covered companies, biennial filers’
material financial distress or failure
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would be most likely to pose risks to
U.S. financial stability, so their full
resolution plans should, as a general
matter, be the most comprehensive. The
agencies believe that this procedural
change is also responsive to
commenters’ concerns about the degree
of tailoring of informational content
requirements between biennial filers
and triennial full filers. Accordingly, the
agencies believe that the final rule
reflects appropriate tailoring of
informational content among different
categories of covered companies.
4. Waivers of Informational Content
Requirements
The proposal would have continued
to permit the agencies to waive certain
informational content requirements for
one or more firms on the agencies’ joint
initiative, given that through a covered
company’s repeated resolution plan
submissions, certain aspects of its
resolution plan may reach a steady state
or become less material such that
regular updates would not be useful to
the agencies in their review of the
resolution plan. The proposal also
introduced a process whereby a covered
company that had previously submitted
a resolution plan would have been able
to apply for a waiver of certain
informational content requirements of a
full resolution plan. Under the proposal,
firms would have been able to submit
one waiver request per filing cycle,
which would have included a public
section containing the requirements
sought to be waived. These requests
would have been required to be
submitted at least 15 months before the
submission date and include all
information necessary to support the
request. A waiver request would have
been automatically granted on the date
that was nine months prior to the
submission date for the resolution plan
to which it related if the agencies did
not jointly deny the waiver prior to that
date. The proposal would have enabled
the agencies to deny a waiver in their
discretion.
Several commenters supported the
firm-initiated waiver request process,
noting that the process would help
streamline submissions and that
automatically approving waivers unless
jointly denied would ensure that
requests would not be unduly delayed.
One of those commenters suggested that
the waiver should be made automatic
for filers that qualified to submit
tailored resolution plans under the 2011
rule, while others, as discussed above,
generally contended that different
categories of filers should be subject to
different levels of resolution plan
informational content requirements.
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Other commenters expressed concern
that the firm-initiated waiver request
process was unnecessary or would
inappropriately reduce resolution plan
content requirements, increase burden
on the agencies, and be biased in favor
of approval. One commenter suggested
that waivers should be required to be
approved by both agencies. This
commenter was further concerned that
the agencies could grant waivers for
multiple submission cycles, effectively
undermining the proposed rule’s limit
of one waiver request per submission
cycle. Another commenter stated that
providing for automatic approval of
waivers when the agencies do not
jointly deny them could result in the
loss of important information based on
the challenges of coordinating joint
agency action.
The final rule retains both the
agencies’ ability to waive certain
informational content requirements on
their joint initiative and the firminitiated waiver request process
introduced in the proposal, with some
modifications. In response to concerns
raised about the firm-initiated waiver
request process, and to suggestions that
the agencies should take additional
steps to tailor the informational content
requirements between biennial filers
and triennial full filers, the agencies
have revised the process for covered
companies to request waivers. The
agencies have determined that the firminitiated waiver process should not be
extended to biennial filers in light of the
additional risks that these firms present.
Because the concerns noted above
outweigh the advantages of a firminitiated waiver process for biennial
filers, the agencies are limiting firminitiated waiver requests to triennial full
filers and triennial reduced filers.34 As
under the 2011 rule, the agencies have
the authority to jointly waive one or
more of the resolution plan
requirements on their own initiative for
any firm, including any biennial filer.
This procedural change will help to
address these commenters’ concerns by
ensuring that, absent the agencies
granting a waiver on their own
initiative, all full resolution plan
informational content requirements will
remain in place for biennial filers,
whose material financial distress or
34 Waiver requests will generally have limited
application to triennial reduced filers under the
final rule because waiver requests do not apply to
a covered company’s initial full resolution plan or
reduced resolution plans. However, the firminitiated waiver request process could apply to a
triennial reduced filer if the agencies were to
require it to submit a full resolution plan with at
least 18 months’ prior notice.
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failure would be most likely to pose a
threat to U.S. financial stability.
The agencies believe that for triennial
full filers and triennial reduced filers,
waiver requests will be a useful means
to tailor the informational content of
resolution plans in a manner that will
be both efficient for the agencies and
transparent to the public and,
accordingly, the final rule permits
waiver requests from these firms.
Relative to the proposed rule, the final
rule changes the procedure by which
the agencies act on waiver requests.
Under the proposal, a waiver request
would have been automatically
approved if the agencies did not jointly
deny it before a certain date. Under the
final rule, a waiver request is
automatically denied if the agencies do
not jointly approve it before a certain
date. The agencies believe that this
change from the proposal will be more
consistent with other provisions of the
final rule that require joint agency
agreement. The agencies will
nonetheless endeavor to respond to
waiver requests in a timely manner.
Furthermore, safeguards are in place
to ensure that firm-initiated waivers
would not inappropriately reduce
resolution plan content requirements or
otherwise favor filers and that the firminitiated waiver request process will not
be unnecessarily burdensome for the
agencies or inefficient. For example,
firms can only request waivers for full
resolution plans and firms can only
submit one waiver request per full
resolution plan submission. In addition,
firm-initiated waivers are not permitted
for some of the most critical
informational content, including the
core elements required for a targeted
resolution plan, any information
specifically required pursuant to section
165(d) of the Dodd-Frank Act,
information about material changes, and
information about deficiencies and
shortcomings. Moreover, the timing for
the agencies’ processing of waiver
requests has been structured to ensure
that the agencies have sufficient
opportunity to properly review and
consider the requests.
This preamble describes below the
kind of information that waiver requests
should contain, which should help
make the firm-initiated waiver request
process more efficient and focused.
Finally, notwithstanding the new firminitiated waiver request process, the
agencies have retained the ability under
the final rule to obtain additional
information in a timely manner through,
for example, interim updates, notices of
extraordinary events, and the ability to
require off-cycle resolution plan
submissions.
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The agencies are also clarifying in the
final rule that, while the agencies may
waive requirements for one or more
resolution plan submissions on their
own initiative, firm-initiated waivers
apply to the submission of only a single
full resolution plan. The final rule also
clarifies that the agencies may approve
or deny a waiver request in whole or in
part.
One commenter suggested changes to
the firm-initiated waiver request process
aimed at ensuring transparency and
consistency in its application, including
requirements that the agencies consider
whether approved waivers should apply
to similarly situated firms and that both
the criteria used in waiver
determinations and the agencies’ waiver
decisions be made public. To ensure
transparency in the firm-initiated
waiver request process, the agencies
intend to make their decisions on
waiver requests public, although the
information made public may not be the
complete response provided to a firm
and would not include confidential
information. The agencies also note that
under the final rule they will be able to
waive informational content
requirements on their joint initiative,
and they could elect to exercise this
discretionary authority to waive
informational content requirements for
similarly situated firms if they deem it
appropriate to do so. However, the final
rule retains the agencies’ ability to
approve or deny waiver requests at their
joint discretion. The proposal’s
preamble included clarifying examples
of how the agencies expect to exercise
this discretion to approve waivers in
appropriate circumstances, and these
examples also apply for the final rule.
For example, a waiver may be
appropriate to reduce informational
content that would be of limited utility
to the agencies, such as when the
agencies have recently completed an indepth review of a particular business
line and are satisfied that they are in
possession of current information
relevant to a firm’s ability to resolve that
business line. More specifically, if the
agencies have recently undertaken a
comprehensive review of a firm’s
Payments, Clearing, and Settlement
(PCS) activities, it may be appropriate to
waive the requirement for that firm to
submit information relevant to these
activities in its next resolution plan
submission. A waiver may also be
appropriate for a firm that submitted a
tailored resolution plan under the 2011
rule and requests a waiver that would
limit the firm’s required resolution plan
content in a manner that is similar to
the tailored resolution plan provisions.
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Additional circumstances may arise
under the final rule where it is
appropriate to grant or deny waivers,
and the agencies believe it is therefore
appropriate to maintain a flexible
standard under the final rule.
A covered company should provide
all information necessary to support its
waiver request, including an
explanation of why approval of the
request would be appropriate, why the
information for which a waiver is
sought would not be relevant to the
agencies’ review of the firm’s resolution
plan, and confirmation that the request
meets the eligibility requirements for a
waiver under the final rule (i.e., that it
is not a core element, not related to an
identified deficiency that has not been
adequately remedied, etc.). To ensure
that the agencies have the information
necessary to evaluate a waiver request,
the final rule provides that covered
companies would be required to explain
why the information sought to be
waived would not be relevant to the
agencies’ review of the covered
company’s next full resolution plan and
why a waiver of the requirement would
be appropriate. Failure to provide
appropriate explanation or any
information requested by the agencies in
a timely manner could lead the agencies
to deny a waiver request on the basis
that insufficient explanation or a lack of
information makes it impossible to
determine that the information sought to
be waived would not be relevant to their
review of the resolution plan. A full
resolution plan should specify content
omitted due to a waiver request that was
granted.
Two commenters suggested that the
deadline for a waiver request to be
jointly denied by the agencies should be
moved from nine months to 12 months
prior to the submission deadline to
better align with filers’ resolution plan
preparation timelines. These
commenters suggested that the rule
should provide for waiver requests to be
submitted 15 months prior to a full
resolution plan submission date and
allow the agencies 90 days within
which to consider and act upon waiver
requests, thereby reducing the time
period for agency review from six
months to 90 days.
The agencies recognize that a firm
may require more than nine months to
prepare a full resolution plan taking into
account an approved waiver request.
Therefore, the final rule provides that a
waiver request is automatically denied
on the date that is 12 months prior to
the submission date for the resolution
plan to which it related if the agencies
do not jointly approve the waiver
request prior to that date. However, the
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agencies continue to believe that a
minimum of six months is the
appropriate period for the agencies to
review a waiver request. Accordingly,
the final rule requires a waiver request
to be submitted at least 18 months
before the related resolution plan
submission date. If the agencies waive
informational content requirements for
one or more firms on the agencies’ own
initiative, the agencies will endeavor to
provide those firms with notice of the
waiver at least 12 months before their
next resolution plan submission date.
5. Targeted Resolution Plans
The proposal included a new type of
resolution plan: A targeted resolution
plan. The agencies proposed the
targeted resolution plan to strike the
appropriate balance between providing
a means for the agencies to continue
receiving updated information on
structural or other changes that may
impact a firm’s resolution strategy while
not requiring submission of information
that remains largely unchanged since
the previous submission. Under the
proposed rule, the targeted resolution
plan would have been a subset of a full
resolution plan and would have
included the following components:
The information required to be included
in a full resolution plan regarding
capital, liquidity, and the covered
company’s plan for executing any
recapitalization contemplated in its
resolution plan, including updated
quantitative financial information and
analyses important to the execution of
the covered company’s resolution
strategy (i.e., the core elements); a
description of material changes since
the covered company’s previously
submitted resolution plan and changes
the covered company has made to its
resolution plan in response; a
description of changes in response to
firm-specific feedback provided by the
agencies, general guidance issued by the
agencies, or legal or regulatory changes;
a public section; and information
responsive to targeted areas of interest
identified by the agencies at least 12
months prior to the submission.
The agencies received several
comments regarding the proposed
targeted resolution plan. One
commenter asserted that the agencies
should further tailor the contents of the
targeted resolution plan based on firms’
structures, business models, and
activities in the risk-based indicators
and that the targeted resolution plan
requirement should apply differently to
foreign filers subject to Category II or III
standards. Another commenter
expressed concern that the targeted
resolution plan did not include
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significant elements, such as booking
and trading practices for derivatives,
trading exposure limits, and
relationships with counterparties, and
that targeted resolution plans are
untested. Another commenter expressed
concerns that the proposal’s
requirement for biennial filers and
triennial full filers to alternate between
full and targeted resolution plans would
not be sufficient to capture important
information about resolvability given
the speed with which firms can change.
Another commenter suggested that the
agencies clarify that targeted areas of
interest identified by the agencies
would not require information that is
wider in scope or depth than the
information required for a full
resolution plan.
The agencies are finalizing the
elements of the targeted resolution plan
as proposed, other than requiring a firm
to affirm that no material change has
occurred, if applicable, and clarifying
that a targeted information request will
be made in writing.35 Regarding the
request for further tailoring of the
targeted resolution plan requirement,
the targeted resolution plan is already
tailored to capture the core elements
and key informational content most
35 The proposal’s preamble included clarifying
examples of how the agencies expect firms to
respond to the core elements informational content
requirement, and these examples also apply for the
final rule. For firms that have received general
guidance from the agencies applicable to their
upcoming submissions regarding capital, liquidity,
and governance mechanisms, the targeted
resolution plans should address these elements
consistent with that general guidance. For example,
a targeted resolution plan could discuss changes to
a firm’s methodology for modeling liquidity needs
for its material entities during periods of financial
stress, as well as changes to the firm’s means for
providing capital and liquidity to such entities as
would be needed to successfully execute the firm’s
resolution strategy. These updates could, for
example, involve changes to triggers upon which
the firm relies to execute a recapitalization,
including triggers based on capital or liquidity
modeling. See, e.g., Guidance for § 165(d)
Resolution Plan Submissions by Domestic Covered
Companies, 84 FR 1438, 1449 (February 4, 2019);
Guidance for 2018 § 165(d) Annual Resolution Plan
Submissions By Foreign-based Covered Companies
that Submitted Resolution Plans in July 2015,
https://www.federalreserve.gov/newsevents/
pressreleases/files/bcreg20170324a21.pdf, https://
www.fdic.gov/resauthority/2018subguidance.pdf.
The firms that received this general guidance would
be expected to address Resolution Capital
Adequacy and Positioning (RCAP), Resolution
Liquidity Execution Need (RLEN), and governance
mechanisms as part of their updates concerning
capital, liquidity, and any plans for executing a
recapitalization, respectively. A firm that has not
received general guidance is required to describe
the capital and liquidity needed to execute the
firm’s resolution strategy consistent with § __.5(c),
(d)(1)(i), (iii), and (iv), (e)(1)(ii), (e)(2), (3), and (5),
(f)(1)(v), and (g) of the final rule and, to the extent
its resolution plan contemplates recapitalization,
the covered company’s plan for executing the
recapitalization consistent with § __.5(c)(5) of the
final rule.
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critical to helping ensure orderly
resolution in bankruptcy, and to the
extent additional tailoring is needed, the
agencies can provide it through agencyinitiated waivers and targeted
information requests. Accordingly, the
agencies believe that the final rule will
facilitate appropriate tailoring of
informational content requirements. The
agencies also note that they will
continue to communicate their tailored
expectations for resolution plan content
through firm-specific feedback.
Regarding commenters’ concerns that
the targeted resolution plan does not
include certain important elements, the
agencies have found, based on their
experience reviewing resolution plans,
that the information that would be
contained in the proposed targeted
resolution plan is the information that is
most important to assessing firms’
resolvability, including the information
that has the tendency to change with the
most frequency. While information
about other topic areas may be relevant
to resolvability, the agencies believe it is
appropriate to receive this other
information on a less frequent basis
through full resolution plan
submissions. The agencies note that
targeted resolution plans must also
address material changes. Accordingly,
a covered company that experiences
material changes relating to, for
example, its booking and trading
practices for derivatives, trading
exposure limits, relationships with
counterparties, or other activities or
characteristics, would be required to
include such information in its targeted
resolution plan. In addition, the
agencies have designed the targeted
resolution plan to ensure that they will
receive important information that
would allow them to review and
evaluate potential problem areas,
including by allowing the agencies to
require firms to respond to targeted
information requests, while permitting
less frequent submission of information
that may have a tendency to remain
materially unchanged over time. The
agencies’ ability to make targeted
information requests, require full
resolution plan submissions and interim
updates, move resolution plan
submission dates, and receive notices of
extraordinary events provides further
means for the agencies to receive
additional information from these firms.
Regarding one commenter’s request
for clarification in relation to the
targeted information requests element of
the targeted resolution plan, consistent
with the proposal, the agencies note that
a targeted resolution plan is a subset of
a full resolution plan. Accordingly, the
information to be provided regarding
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areas of focus within a targeted
resolution plan would not require
submission of information wider in
scope than what a full resolution plan
requires.
The agencies may, however, request
information in greater depth than the
firm chose to provide in prior
submissions.
6. Reduced Resolution Plans
The proposal would have formalized
the informational content requirements
for the reduced resolution plan. For
foreign banking organizations with
relatively limited U.S. operations, the
reduced resolution plan components
were proposed to include: A description
of (1) material changes experienced by
the covered company since the filing of
the covered company’s previously
submitted resolution plan and (2)
changes to the strategic analysis that
was presented in the firm’s previously
submitted resolution plan resulting from
material changes, firm-specific feedback
provided by the agencies, general
guidance issued by the agencies, or legal
or regulatory changes. Reduced
resolution plans would also contain a
public section. The agencies noted that
receiving updates of this information
would permit them to continue to
monitor significant changes in a firm’s
structure or activities while
appropriately focusing the informational
components of these firms’ resolution
plans.
The agencies received several
comments on the reduced resolution
plan. One commenter suggested that
reduced resolution plans would not
provide the agencies sufficient
information and that agencies may not
be able to assess whether a change is
material as a result of triennial reduced
filers not filing full resolution plans
after their initial submissions. Another
commenter suggested that firms that had
previously been resolution plan filers
should not be required to submit a new
full resolution plan upon once again
becoming a covered company and a new
triennial reduced filer. Another
commenter suggested that the agencies
clarify when triennial reduced filers
would be required to submit full
resolution plans under the final rule.
The agencies are finalizing the
reduced resolution plan as proposed,
other than requiring an affirmation that
no material change has occurred, if
applicable. Taking into account the
relative degree of risk posed by these
firms, the agencies believe that the
reduced resolution plan as proposed
generally would capture the information
necessary for the agencies to assess
triennial reduced filers’ resolvability.
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The material change requirement in the
reduced resolution plan is designed to
capture important information relevant
to the firm’s resolvability, its resolution
strategy, and implementation of the
resolution strategy. In addition, and as
discussed above, the final rule has been
revised from the proposal to require that
a firm affirmatively state in its
resolution plan that no material change
has occurred since its prior resolution
plan submission if the resolution plan
does not identify any material change.
The agencies believe this clarification
will further help to ensure that firms
give due attention to the requirement to
identify material changes. Finally, the
agencies’ ability to require full
resolution plan submissions and interim
updates, move resolution plan
submission dates, and receive notices of
extraordinary events provides further
means for the agencies to receive
additional information from triennial
reduced filers.
The final rule also retains the
requirement that any firm that was not
a covered company on the effective date
of the final rule but becomes a triennial
reduced filer after the effective date of
the final rule submit a full resolution
plan as its initial submission, even if the
firm was at some point previously
subject to resolution planning
requirements (e.g., under the 2011 rule).
There could be an extended period of
time between a firm’s previous full
resolution plan submission and the time
when it again becomes subject to the
final rule, rendering the earlier full
resolution plan less relevant to the
firm’s current operations, activities, and
structure. The agencies note, however,
that a firm would be able to incorporate
by reference information from its prior
resolution plan that meets the final
rule’s standard for incorporation by
reference. In addition, the agencies are
clarifying that full resolution plans filed
under the 2011 rule by firms that would
continue to be covered companies under
the final rule and would be triennial
reduced filers under the final rule
would be grandfathered for purposes of
determining compliance with the
requirement that a triennial reduced
filer’s initial submission be a full
resolution plan. Accordingly, those
firms would be required to submit
reduced resolution plans going forward
but would not be required to resubmit
a new full resolution plan absent other
relevant changes in their circumstances
(e.g., becoming subject to Category II or
Category III standards).
7. Tailored Resolution Plans
Under the 2011 rule, a tailored
resolution plan was a means for certain
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bank-centric firms to request that their
resolution plan submissions focus on
nonbank activities that may pose
challenges to executing the firm’s
resolution strategy. Pursuant to the 2011
rule’s tailored resolution plan notice
requirement, firms were required to
apply to the agencies to submit a
tailored resolution plan rather than a
full resolution plan every year that a
submission was required. The agencies’
proposal would have eliminated the
tailored resolution plan in light of the
introduction of the firm-initiated waiver
request process and the targeted
resolution plan as effective substitutes.
The agencies also noted in the proposal
that many of the covered companies that
were eligible under the 2011 rule to file
a tailored resolution plan would no
longer be subject to the resolution
planning requirement under the final
rule or would become triennial reduced
filers.
One commenter expressed concern
regarding the proposal to eliminate the
tailored resolution plan. In particular,
the commenter stated that previous
tailored resolution plan filers should be
grandfathered so that they would not
need to apply for a waiver to continue
to submit similar submissions under the
final rule. As an alternative, the
commenter proposed that the agencies
limit the scope of these firms’ full and
targeted resolution plan submissions to
nonbank operations. Another
commenter asserted that the proposal
should be modified to allow for
automatic waiver, upon request, from
certain informational content
requirements for filers that qualified to
submit tailored resolution plans under
the 2011 rule.
The agencies are finalizing the
proposal to eliminate the tailored
resolution plan type. As explained in
the proposal, the agencies expect that
the firm-initiated waiver request process
and targeted resolution plan
requirements will be effective
substitutes for the tailored resolution
plan and will allow the agencies to
appropriately tailor informational
content requirements, taking into
account the relative mix of banking and
non-banking activities for particular
filers. Accordingly, the agencies believe
that it is unnecessary to retain the
tailored resolution plan in the final rule.
C. Critical Operations Methodology and
Reconsideration Process
Under the final rule, and consistent
with the 2011 rule, a critical operation
is an operation the failure or
discontinuance of which would pose a
threat to the financial stability of the
United States. The 2011 rule provides
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for critical operations to be identified by
the firms or at the agencies’ joint
direction. As part of their rule
implementation and supervision efforts,
the agencies have developed a process
and methodology for jointly identifying
critical operations and have made
certain critical operations
identifications. In recognition that
financial markets and firms change over
time, the agencies proposed establishing
a periodic, comprehensive review of
critical operations identifications by
both the agencies and covered
companies to ensure that resolution
planning reflects current operations and
markets and appropriately focuses on
areas vital to financial stability.
1. Identification by Covered Companies
and Methodology Requirement
Many covered companies have
incorporated into their resolution
planning frameworks a procedure for
identifying critical operations, and the
agencies proposed requiring biennial
filers and triennial full filers to maintain
a process for identifying critical
operations on a scale that reflected the
nature, size, complexity, and scope of
their operations. The proposal would
have required this process for selfidentification to occur at least as
frequently as a covered company’s
resolution plan submission cycle and be
documented in the covered company’s
corporate governance policies and
procedures. In addition, the proposal
would have established a process
whereby firms that did not currently
have identified critical operations could
request a waiver from the requirement
to maintain a self-identification process
and methodology. Firms that selfidentified a critical operation would
have been required to notify the
agencies if they ceased to identify an
operation as a critical operation. Finally,
the agencies proposed a conforming
definitional change.36
Two commenters suggested that the
agencies clarify that the requirement
that firms have a process to self-identify
critical operations is presumptively
waived for any covered company that
has previously submitted resolution
plans and does not currently have an
identified critical operation. Finally,
one commenter recommended either
eliminating or clarifying the use of the
term ‘‘economic functions’’ in the
36 The agencies proposed including a new
definition, ‘‘identified critical operations,’’ to clarify
that critical operations can be identified by either
the covered company or jointly identified by the
agencies and that until such an operation has been
identified by either method, the operation does not
need to be addressed as a critical operation in a
resolution plan.
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agencies’ description of a firm’s
methodology for identifying critical
operations.
Consistent with the proposal, under
the final rule, biennial filers and
triennial full filers must establish and
implement a process designed to
identify their critical operations.
However, after July 1, 2022, the final
rule also requires a triennial reduced
filer that has an identified critical
operation to establish and implement a
process designed to identify its critical
operations. As under the proposal, in all
cases, that process must contain a
methodology and consider the nature,
size, complexity, and scope of the
covered company’s operations.
Under the final rule, triennial reduced
filers with identified critical operations
will be required to establish and
implement a process to identify critical
operations, but only after they are
required to submit their next resolution
plans in 2022. Where a firm has an
identified critical operation, it may be
the case that it has additional critical
operations such that a periodic review
by the firm of its operations that is
appropriate to the nature, size,
complexity, and scope of its operations
could be beneficial. This timing will
provide the agencies the opportunity to
complete their first joint review of
critical operations under the final rule
and triennial reduced filers with the
opportunity to request reconsideration
of any currently identified critical
operation in anticipation of their next
resolution plan submission.
Also consistent with the proposal, the
final rule allows a covered company
that has previously submitted a
resolution plan and does not have an
identified critical operation to request a
waiver of the requirement to have a
process and methodology to identify its
critical operations if it does not have an
identified critical operation as of the
date the waiver request is submitted.37
Under the proposal, the covered
company would have needed to apply
for such a waiver at least 15 months
before the submission date for that
37 The proposal’s preamble included clarifying
examples of why a waiver may be appropriate, and
these examples also apply for the final rule. For
example, for a covered company that has not
experienced any significant changes in its business,
operations, or organizational structure since its
most recent resolution plan, a waiver request that
so states, with reasonable supporting detail, could
provide sufficient information for the agencies to
evaluate the request. Alternatively, if one of a
covered company’s operations gained significant
market share since it submitted its most recent
resolution plan submission, the waiver request
should include this information, a description of
the operation, and a discussion of why this change
would not warrant the development of a
methodology for identifying critical operations.
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resolution plan, and waivers would
have been automatically granted on the
date that was nine months prior to the
date that the resolution plan it relates to
was due if the agencies did not jointly
deny the waiver prior to that date.
Consistent with the changes to the
firm-initiated waiver request process for
informational content requirements,
under the final rule, a request for a
waiver from the critical operations
process and methodology requirement
will be automatically denied on a
certain date unless the agencies have
jointly approved it before that date.
Requiring joint approval of waiver
requests will be more consistent with
other provisions of the final rule that
require joint agency approval.
The agencies recognize that a firm
may require more than nine months to
prepare a resolution plan taking into
account any critical operation the
covered company newly identifies and,
accordingly, a covered company may
need to complete its process more than
nine months before its next resolution
plan is due. Therefore, the final rule
provides that a waiver request is
automatically denied on the date that is
12 months prior to the submission date
for the resolution plan to which it
related if the agencies do not jointly
approve the waiver prior to that date.
However, the agencies continue to
believe that a minimum of six months
is the appropriate period for the
agencies to review a waiver request.
Accordingly, the final rule requires a
waiver request to be submitted at least
18 months before the submission date.
This timing is consistent with the
timing for firm-initiated waiver requests
of informational content requirements
under the final rule. However, to
provide firms with an appropriate
period to prepare a waiver request after
the agencies’ adoption of the final rule
with respect to a resolution plan due on
or before July 1, 2021, the final rule
provides that a waiver request must be
submitted at least 17 months before that
submission date.
The proposal would have required a
covered company to submit a waiver
request with respect to each resolution
plan submission. The agencies
recognize that a covered company that
does not have an identified critical
operation and has been granted a waiver
may not experience any changes
between resolution plan submissions
that would increase the likelihood of it
having a critical operation. Accordingly,
to balance the benefits of covered
companies engaging in a process to
identify their critical operations with
the burden placed on covered
companies, the final rule provides that
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if a critical operations waiver request is
granted, the waiver will remain effective
until the covered company is required
to submit its next full resolution plan.
For example, if a triennial full filer
submits a waiver request in connection
with a full resolution plan that is due on
or before July 1, 2024 and the request is
approved, the waiver would be effective
for the July 1, 2024 full resolution plan
submission and the firm’s next regularly
scheduled targeted resolution plan due
on or before July 1, 2027. To continue
the effectiveness of the waiver, the
covered company would need to submit
a new waiver request at least 18 months
before its next regularly scheduled full
resolution plan due on or before July 1,
2030. Similarly, if a triennial full filer
submits a waiver request in connection
with a targeted resolution plan and the
request is granted, the waiver would be
effective for only that targeted
resolution plan and not its next full
resolution plan.
The agencies recognize a foreign firm
may not first determine the category of
standards to which it is subject (and,
accordingly, whether it is a triennial full
filer or a triennial reduced filer) until
after the date by which a triennial full
filer would need to submit a waiver
request with respect to its resolution
plan due on or before July 1, 2021.
Therefore, the final rule exempts each
foreign triennial full filer from the
requirement to establish and implement
a process and methodology designed to
identify their critical operations with
respect to its resolution plan due on or
before July 1, 2021 if the foreign firm
does not have an identified critical
operation as of the date by which the
waiver would have had to be submitted
for this resolution plan submission (i.e.,
17 months before the resolution plan
submission date).
In addition, the agencies are clarifying
the final rule by eliminating usage of the
term ‘‘economic function,’’ as suggested
by the commenter. However, consistent
with the preamble to the proposed rule,
the agencies note that the types of
operations that may be critical
operations include, but are not limited
to, the core banking functions of deposit
taking; lending; payments, clearing and
settlement; custody; wholesale funding;
and capital markets and investment
activities. In general, an operation is
most likely to be a critical operation of
the firm where both (a) a market or
activity engaged in by the firm is
significant to U.S. financial stability and
(b) the firm is a significant provider or
participant in such a market or activity.
Factors relevant for determining
whether a market or activity is
significant to U.S. financial stability, or
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whether a firm is a significant provider
or participant in such a market or
activity, may include substitutability,
market concentration,
interconnectedness, and the impact of
cessation. The firm’s analysis should
focus on the significance of the activity
to U.S. financial stability, not whether a
particular activity is significant for a
foreign parent or other foreign affiliates
of the firm.38 The process undertaken by
a firm in completing such an analysis
should be commensurate with the
nature, size, complexity, and scope of
its operations.39
2. Identification by Agencies and
Requests for Reconsideration
Under the proposal, the agencies
would have reviewed the operations of
covered companies at least every six
years to determine whether any new
operations should be identified as
critical or any prior identifications
should be rescinded. The proposal
provided that, when the agencies
identified an operation as critical, the
covered company would have been
required to treat the operation as an
identified critical operation in future
resolution plans, unless the
identification occurred within six
months of a firm’s resolution plan
submission date. In addition, the
proposal would have permitted a
covered company to request that the
agencies reconsider a jointly made
critical operation identification. The
agencies generally would have been
required to complete their assessment of
the request within 90 days after receipt
of the request, if the request were made
at least 270 days before the firm’s next
resolution plan submission deadline.
Commenters were generally
supportive of efforts to codify the
critical operations identification
processes. Some commenters suggested
that the agencies modify the timeline for
de-identification of a critical operation
identified by the agencies.40 A
commenter also suggested that the
deadline for the agencies to be able to
38 Where a firm’s operation, such as U.S. dollar
deposit taking, is significant to the firm, but the
failure or discontinuance of that activity would not
pose a threat to the financial stability of the United
States, that operation would not be an identified
critical operation under the final rule.
39 For a foreign firm, the critical operations
identification process and methodology should be
commensurate with the nature, size, complexity,
and scope of its U.S. operations.
40 Specifically, the commenters suggested
requiring a request for de-identification to be filed
no later than 15 months before the next resolution
plan submission is due; mandating that the agencies
make a decision within 90 days of receipt of the
request; and deeming the request approved if not
denied by one year prior to the resolution plan
submission date.
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identify a new critical operation be 12
months prior to a submission deadline,
instead of six months, as proposed.
The agencies are adopting the
proposed provisions related to the
identification of critical operations by
the agencies with revisions that address
certain concerns raised by
commenters.41 Consistent with the
proposal, the final rule permits the joint
identification and rescission of critical
operations by the agencies at any time
and the agencies will review all
identified critical operations and the
operations of firms for consideration as
critical operations at least every six
years. The agencies recognize that a firm
may require time to revise its resolution
plan to take into account a newly
identified critical operation. Therefore,
consistent with commenters’ feedback, a
covered company will be required to
treat a critical operation as an identified
critical operation only if the joint
identification is made at least 12 months
before the resolution plan submission
date. The agencies believe 12 months is
a reasonable period for a firm to assess
the identified critical operation and
adjust its resolution plan. To align with
this notice period, the agencies will
endeavor to complete their first joint
review under the final rule of the
operations of covered companies at least
12 months prior to the 2021 resolution
plan submission date.
Finally, the agencies are adopting a
modified process whereby firms can
request that the agencies reconsider a
jointly identified critical operation.
Under the final rule, a firm may request
reconsideration of a jointly identified
critical operation at any time. If a firm
requests reconsideration at least 18
months prior to its next resolution plan
submission date, the agencies will
generally complete their review no later
than 12 months before that resolution
plan submission date. However, the
agencies may request additional
information, in which case the agencies
will complete their review no later than
the later of (a) 90 days after the
submission of all requested information
and (b) 12 months before the resolution
plan submission date. This generally
aligns the timing for requests for
reconsideration with the timing under
the final rule for waiver requests of the
requirement to establish and implement
a process designed to identify critical
operations and firm-initiated waiver
requests of informational content
requirements.
The agencies retain discretion to defer
consideration of a reconsideration
41 The agencies are also adopting the proposed
term, ‘‘identified critical operations.’’
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request submitted less than 18 months
before a resolution plan submission date
until after the covered company’s next
submission. If the agencies do not defer
consideration of the reconsideration
request, the agencies intend to
communicate with the firm regarding
the timing of the agencies’ response. If
the agencies defer consideration of a
request submitted less than 18 months
before a resolution plan submission
date, the agencies will generally
complete their review no later than 12
months before the next resolution plan
submission date that follows that
resolution plan submission date.
The agencies understand commenters’
concerns regarding the de-identification
timeline, and have revised and
lengthened the process to provide
covered companies with additional
notice of new identifications prior to a
resolution plan submission date.
However, the agencies decline to adopt
the commenters’ request for an
automatic rescission of a critical
operations identification if a request is
submitted at least 15 months before the
firm’s next resolution plan is due and
the agencies have not acted within three
months. A firm’s initial request for deidentification may be incomplete or
unclear, and critical operations
identifications may raise complex issues
that require substantial time to consider.
Accordingly, the agencies may require
more than 90 days to make an informed
decision regarding whether an operation
should be de-identified. The agencies
believe the final rule adequately
balances covered companies’ need for
certainty prior to a resolution plan
submission date with the need to
carefully assess critical operations
identifications.
D. Clarifications to the 2011 Rule
1. Resolution Strategy for Foreign-based
Covered Companies
The 2011 rule does not specify the
assumptions a foreign banking
organization should make with respect
to how resolution actions it takes
outside of the United States should be
addressed in its resolution plan. The
proposal, consistent with general
guidance that the agencies have
previously provided,42 would have
42 See Guidance for 2018 § 165(d) Annual
Resolution Plan Submissions By Foreign-based
Covered Companies that Submitted Resolution
Plans in July 2015, https://www.federalreserve.gov/
newsevents/pressreleases/files/
bcreg20170324a21.pdf, p. 4, https://www.fdic.gov/
resauthority/2018subguidance.pdf, p. 4 and https://
www.federalreserve.gov/newsevents/pressreleases/
bcreg20180129a.htm, https://www.fdic.gov/news/
news/press/2018/pr18006.html.
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clarified that covered companies that
are foreign banking organizations
should not assume that the covered
company takes resolution actions
outside of the United States that would
eliminate the need for any U.S.
subsidiaries to enter into resolution
proceedings.
One commenter asserted that the
agencies should better align U.S.
resolution planning with home country
resolution strategy by recognizing the
development of single point of entry
strategies, total loss absorbing capacity,
and other improved resolvability
measures implemented by international
banks. Although the agencies recognize
that foreign banking organizations may
have home-country resolution strategies
under which U.S. entities are not
planned to enter resolution, the DoddFrank Act requires firms to plan for the
failure of their U.S. operations. General
guidance and firm-specific feedback
have taken into account resolution plan
resolvability improvements made by
foreign banking organizations.
Accordingly, the final rule includes this
clarification as proposed.
2. Covered Company in Multi-Tier
Foreign Banking Organization Holding
Companies
The definition of covered company in
the 2011 rule includes the top tier entity
in a multi-tier holding company
structure of any foreign bank or
company that is a bank holding
company or is treated as a bank holding
company under section 8(a) of the
International Banking Act of 1978.
There is no benefit to the agencies in
obtaining resolution plan information
relating to a top tier holding company
that is, for example, a government,
sovereign entity, or family trust. The
agencies previously addressed this issue
on a case-by-case basis and proposed
including a formal process in the
proposal by which the agencies would
identify a subsidiary in a multi-tiered
FBO holding company structure to serve
as the covered company that would be
required to submit the resolution plan.
The agencies did not receive comment
on this provision and are adopting the
clarification as proposed.
3. Removal of the Incompleteness
Concept and Related Review
The 2011 rule includes a requirement
that the agencies review a resolution
plan within 60 days of submission and
jointly inform the covered company if
the resolution plan is informationally
incomplete or additional information is
required to facilitate review of the
resolution plan. This process has not led
to resubmissions in recent years, and
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the proposal would have removed it.
The agencies received one comment in
support of this provision, and the
agencies are removing the
incompleteness concept and related
review as proposed for the reasons
stated in the proposal.
4. Assessment of New Covered
Companies
The 2011 rule provides that covered
company status for a foreign banking
organization may be based on annual or
quarterly reports, depending on
availability of such reports, but does not
clarify whether firms that file quarterly
reports would be assessed for covered
company status on a quarterly or annual
basis. The proposal would have clarified
that a foreign banking organization’s
status as a covered company would be
assessed quarterly for foreign banking
organizations that file the Federal
Reserve’s Form FR Y–7Q (FR Y–7Q) on
a quarterly basis and annually for
foreign banking organizations that file
the Y–7Q on an annual basis only. In
each case, the assessment would have
been based on total consolidated assets
as averaged over the preceding four
calendar quarters as reported on the FR
Y–7Q.
In addition, the proposal would also
have addressed the process for assessing
a firm whose assets have grown due to
a merger, acquisition, combination, or
similar transaction for covered company
status. Under these circumstances, the
agencies would have the discretion to
alternatively consider, to the extent and
in the manner the agencies jointly
consider appropriate, the relevant assets
reflected on the one or more of the four
most recent reports of the precombination entities (the FR Y–9C in
the case of a U.S. firm and the FR Y–
7Q in the case of a foreign banking
organization). The agencies did not
receive comment on these provisions
and are adopting the clarifications as
proposed.
5. Timing of New Filings, Firms That
Change Filing Categories
To address the new filing cycles for
biennial, triennial full, and triennial
reduced filers, the proposal included
related modifications to the timing of
the initial submission for new filers.
The proposal also included a
reservation of authority permitting the
agencies to require the initial resolution
plan earlier than the date of the filing
group’s next filing, so long as the
submission deadline would have been
at least 12 months from the date on
which the agencies jointly determined
to require the covered company to
submit its resolution plan. Similarly, the
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proposal specified the timing and type
of resolution plan a firm would be
required to submit if it changed groups
(e.g., a triennial reduced filer becomes a
triennial full filer or a triennial full filer
becomes a triennial reduced filer). The
agencies received no comments on these
changes and are finalizing them as
proposed with technical changes to
clarify that the relevant date for these
timing provisions is the date as of which
the covered company became a covered
company or a member of a filing group.
6. Clarification of the Mapping
Expectations for Foreign Banking
Organizations
The proposal would have amended
the language governing the expectations
regarding the mapping of intragroup
interconnections and interdependencies
by foreign banking organizations. The
proposal also would have clarified that
foreign banking organizations would be
expected to map (a) the
interconnections and interdependencies
among their U.S. subsidiaries, branches,
and agencies, (b) the interconnections
and interdependencies between these
U.S. entities and any critical operations
and core business lines, and (c) the
interconnections and interdependencies
between these U.S. entities and any
foreign-based affiliates. The agencies
did not receive comment on these
provisions and are adopting the
clarifications regarding mapping
expectations for foreign banking
organizations as proposed.
7. Standard of Review
In reviewing resolution plans, the
agencies have identified ‘‘deficiencies’’
and ‘‘shortcomings’’ in resolution plans
and have issued firm-specific feedback
letters to covered companies describing
the rationale for the findings and
suggesting potential alternatives for how
the identified deficiencies and
shortcomings could be addressed. While
the agencies have defined these terms in
a public statement,43 they are not
defined in the 2011 rule. To provide an
opportunity for public comment on
these terms and a clearer articulation of
the standards the agencies apply in
identifying deficiencies and
shortcomings, the agencies proposed
defining a deficiency and a
shortcoming. In addition, the agencies
proposed continuing to require a
covered company that was assessed to
have a deficiency to submit a revised
resolution plan to the agencies
addressing the deficiency within 90
43 Resolution Plan Assessment Framework and
Firm Determinations (2016), April 13, 2016, https://
www.fdic.gov/news/news/press/2016/pr16031a.pdf.
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days of receiving notice of the
deficiency, consistent with the 2011
rule. The agencies received one
comment in support of the proposal’s
timeline for requiring a firm to respond
to a notice of deficiency, and the
agencies are adopting the definitions of
deficiency and shortcoming, and the
related standard of review, as proposed.
8. Deletion of ‘‘Deficiencies’’ Relating to
Management Information Systems
The 2011 rule requires a resolution
plan to include information about a
covered company’s management
information systems, including a
description and analysis of the system’s
‘‘deficiencies, gaps or weaknesses’’ in
the system’s capabilities. The proposal
would have deleted the term
‘‘deficiencies’’ from this informational
content requirement solely to avoid
confusion with the proposal’s new
definition of ‘‘deficiencies’’ in the
proposal, and not to change the
informational content requirement
relating to a covered company’s
management information systems. The
agencies did not receive comment on
this provision and are adopting the
clarification as proposed.
9. Incorporation by Reference
Similar to the 2011 rule, the proposal
would have continued to allow a
covered company to incorporate by
reference information from its
previously submitted resolution plans,
subject to certain restrictions. The
proposal would have required the
referenced information to remain
accurate in all respects that are material
to the covered company’s resolution
plan, and the incorporated information
would remain subject to the
contemporaneous certification
requirement. The agencies intended that
this clarification regarding the material
accuracy of referenced information
provide covered companies greater
flexibility in their ability to incorporate
by reference information, thereby
reducing duplication and further
streamlining the resolution planning
process. One commenter supported this
clarification and the proposed expanded
ability of firms to utilize incorporation
by reference, and the agencies are
adopting the clarification as proposed.
E. Technical and Conforming Changes
From the Proposal
In addition to the changes to the
proposal described above, the final rule
includes technical and conforming
changes for purposes of clarity and
consistency. For example, the final rule
clarifies that firms are required to
submit a resolution plan on or before
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the applicable submission date. The
technical and conforming changes have
no substantive effect on the final rule as
compared to the proposal.
F. Board Delegation of Authority
The Board has delegated to its
Director of Supervision and Regulation,
or his or her delegatee, in consultation
with the General Counsel, or his or her
delegatee, the authority to identify on
behalf of the Board a holding company
in a multi-tiered holding company to
satisfy the requirements that apply to a
covered company under the final rule,
to the extent such identification is
consistent with the criteria specified in
the final rule and does not raise any
significant legal, policy, or supervisory
concerns.
IV. Effective Date and Transition Period
The effective date of the final rule is
[60 days after publication in the Federal
Register]. Financial institutions that are
covered companies under the final rule
are required to comply with the final
rule beginning on the effective date.
The requirements for covered
companies’ initial resolution plans
under the final rule will be determined
based on their categorization under the
tailoring rules on October 1, 2020,
which is after the first date foreign
banking organizations are required to
submit reports including data for
purposes of their categorization based
on their combined U.S. operations
under the tailoring rules.44 In particular,
firms that are covered companies as of
the effective date of the final rule are
required to submit their initial and
subsequent resolution plans under the
final rule as follows:
Biennial filers (all firms subject to
Category I standards): Covered
companies that are biennial filers on
October 1, 2020 are required to submit
their next resolution plans on or before
July 1, 2021, unless a firm changes its
filing group before July 1, 2021. This
submission will be a targeted resolution
plan. Thereafter, the biennial filers will
alternate between filing full and targeted
resolution plans on a biennial basis.
Triennial full filers (all firms subject
to Category II or Category III standards):
Covered companies that are triennial
full filers on October 1, 2020 are
required to submit targeted resolution
plans on or before July 1, 2021, unless
a firm changes its filing group before
July 1, 2021. The proposal would have
required these firms to submit a full
resolution plan on or before July 1,
44 Top-tier foreign banking organizations will
report the FR Y–15 on behalf of their U.S.
intermediate holding company and combined U.S.
operations using data as of June 30, 2020.
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2021. The agencies recognize a foreign
firm may not first determine the
category of standards to which it is
subject (and, accordingly, whether it is
a triennial full filer or a triennial
reduced filer) until after the date by
which a triennial full filer would need
to submit a firm-initiated waiver request
of informational content requirements
for a full resolution plan due on or
before July 1, 2021. To provide clarity
to covered companies during this
transition period, the final rule requires
all triennial full filers to submit a
targeted resolution plan on or before
July 1, 2021. Thereafter, the triennial
full filers will alternate between filing
full and targeted resolution plans on a
triennial basis.
For firms with outstanding
shortcomings or deficiencies, the
agencies’ expectations regarding
remediation and related timelines
established by the agencies continue to
apply. For example, the four foreign
banking organizations that received
firm-specific feedback letters on
December 20, 2018 (Barclays plc, Credit
Suisse Group AG, Deutsche Bank AG,
and UBS Group AG) are expected to
address their shortcomings and
complete their respective project plans
by July 1, 2020, as provided in the
agencies’ firm-specific feedback letters.
Consistent with prior communications
to these firms, they are required to
submit resolution plans on or before
July 1, 2020 that may be limited to
describing changes that the firms have
made to their July 2018 resolution plans
to address shortcomings identified in
those resolution plans.45
Likewise, consistent with previous
communications to Northern Trust
Corporation, it is required to provide an
interim update, as specified in the
agencies’ joint March 29, 2019 firmspecific feedback letter, concerning its
projects to address the liquidity
shortcoming identified in its 2015
resolution plan.
Triennial reduced filers (all other
filers): Covered companies that are
triennial reduced filers on October 1,
2020 must submit their initial reduced
resolution plans under the final rule on
45 As the final rule makes clear, the requirement
to submit a resolution plan on or before July 1, 2020
does not affect the timing or type of resolution
plans required to be submitted as described above.
The applicable date for completion of the following
activities remains July 1, 2020: (i) The resolvability
enhancement initiatives identified in the agencies’
2018 firm-specific feedback letters, and (ii) any
additional enhancement initiatives identified in the
July 2018 resolution plan submission or in writing
by firm management during the 2018 resolution
plan review. In connection with their July 1, 2020
submissions, the firms should provide an update
concerning these initiatives.
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or before July 1, 2022, unless a firm
changes its filing group before July 1,
2022. Thereafter, they are required to
submit reduced resolution plans on a
triennial basis.
V. Impact Analysis
The final rule will modify the
expected costs imposed by the 2011 rule
while seeking to preserve the benefits to
U.S. financial stability provided by the
2011 rule. The economic effects of the
final rule are driven by the changes in
the reporting costs related to resolution
plan submissions.
Consistent with EGRRCPA, the final
rule changes the asset thresholds at
which all firms are required to file
resolution plans from $50 billion to
$250 billion in total consolidated assets.
The final rule also requires the
submission of resolution plans by
certain firms with $100 billion or more
and less than $250 billion in total
consolidated assets, including those that
have certain risk-based indicators. As of
March 31, 2019, firms with $50 billion
or more and less than $100 billion in
total consolidated assets accounted for
less than 2 percent of total U.S. industry
assets, and firms with $100 billion or
more and less than $250 billion in total
consolidated assets accounted for 18
percent of total U.S. industry assets.46
The net impact of these threshold
changes would reduce the number of
U.S. filers from 23 to 12 and the number
of foreign banking organization filers
from 86 to 62.47 This reduction in
resolution plan filers decreases costs as
fewer firms would be required to
prepare plans.
The final rule also seeks to minimize
the impact of this change on benefits to
U.S. financial stability provided from
resolution plan filings by maintaining
filing requirements for certain firms
with $100 billion or more and less than
$250 billion in total consolidated assets,
including those that have certain riskbased indictors.
The final rule also reduces the
frequency of required resolution plan
submissions for the remaining
resolution plan filers, including the
largest and most complex resolution
plan filers, by extending the default
filing cycle between resolution plan
submissions. The final rule modifies the
filing cycle to every two years for the
U.S. GSIBs and certain systemically
46 Assets as reported on form FR Y–9C for the
quarter ending March 31, 2019.
47 Upon enactment of EGRRCPA on May 24, 2018,
firms with total consolidated assets of less than
$100 billion were automatically no longer subject
to the resolution planning requirement, reducing
the number of U.S. filers and foreign banking
organizations filers.
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important nonbank financial companies
and to every three years for all other
resolution plan filers. This change
formalizes a practice that has developed
over time to extend firms’ resolution
plan submission dates to allow at least
two years between resolution plan
submissions and should reduce costs.
In the August 2018 proposal to extend
mandatory Reporting Requirements
Associated with Regulation QQ, the
estimate of total annual burden for
resolution plan filings was estimated to
be 1,137,797 hours for 111 resolution
plan filers.48 Since then, the number of
resolution plan filers has declined to
109, with a current total annual burden
of 1,066,086 hours.49 Under the final
rule, the revised estimated annual
burden, incorporating proposed
modifications to the resolution plan
rule, is 425,525 hours.50 At an estimated
mean wage of $56.05 per hour,51 this
reduction in the estimated burden hours
has an estimated wage savings of
approximately $35,903,444 per year.
Reductions in submission frequency
and content could potentially reduce
the preparedness of covered companies
to execute a rapid and orderly
resolution in the event of material
financial distress or failure. However,
this potential economic effect would be
ameliorated by the agencies’ authority to
require a firm to submit a full resolution
plan, interim update, or alter resolution
plan submission dates. This authority
would address circumstances where the
agencies determine that waiting for a
firm to submit on its regular submission
cycle could present excess risk.
Finally, the final rule is expected to
improve efficiency by streamlining the
information requirements for the
resolution plan submissions: The final
rule includes a mechanism for certain
firms to request a waiver from certain
informational requirements in full
resolution plan submissions; introduces
a new, more focused resolution plan
submission (i.e., targeted resolution
plan); and formalizes the conditions and
content for reduced resolution plans.
These resolution plan modifications are
appropriate because the firms’
resolution plans have matured and
become more stable through multiple
submissions. Further, the resolution
48 Agency Information Collection Activities:
Announcement of Board Approval Under Delegated
Authority and Submission to OMB, 83 FR 42296
(August 21, 2018).
49 As of March 31, 2019.
50 See Section VI.A. for estimated annual hourly
burden details.
51 Mean hourly wages retrieved from the Bureau
of Labor and Statistics (BLS), Occupational
Employment and Wages May 2017, published
March 30, 2018 https://www.bls.gov/oes/2017/may/
oes_nat.htm.
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plan modifications should reduce the
costs of preparing and reviewing the
resolution plans without having a
material impact on the benefits
provided by the resolution plans.
In short, as detailed in this section,
the proposal would provide estimated
wage savings, to the institutions affected
by it, totaling $35,903,444 due to the
reduction of an estimated 640,561
burden hours needed to comply with
the final rule. Moreover, firms could
reallocate the estimated 640,561 hours
used to comply with the final rule to
other activities considered to be more
beneficial.52 Thus, the total economic
benefits of the proposal could be greater
than the dollar amount estimated.
VI. Regulatory Analysis
A. Paperwork Reduction Act
Certain provisions of the final rule
contain ‘‘collections of information’’
within the meaning of the Paperwork
Reduction Act of 1995 (44 U.S.C. 3501–
3521) (PRA). In accordance with the
requirements of the PRA, the agencies
may not conduct or sponsor, and a
respondent is not required to respond
to, an information collection unless it
displays a currently valid Office of
Management and Budget (OMB) control
number. The agencies reviewed the final
rule and determined that it would revise
the reporting requirements that have
been previously approved by the Board
under OMB control number 7100–0346
(Reporting Requirements Associated
with Regulation QQ; FR QQ). The
Board’s information collection will be
extended for three years, with revision.
Since the original rule was adopted in
2011, the Board’s PRA clearance has
accounted for the entire burden
associated with the rule even though the
Board and the Corporation are both
legally authorized to receive and review
the Resolution Plans. The agencies have
decided to now equally account for the
burden associated with this final rule.
As a result, the Corporation has
submitted to OMB a request to
implement, for three years, an
information collection in connection
with the final rule Resolution Plan
submissions that accounts for half of the
estimated burden associated with the
final rule.
The Corporation has submitted its
request to OMB for review and approval
under section 3507(d) of the PRA (44
U.S.C. 3507(d)) and section 1320.11 of
52 A commenter asserted that firms would likely
eliminate (and not repurpose) compliance jobs,
resulting in cost savings to the firms, and that these
savings will likely only benefit the firms’
shareholders and executives. The agencies note that
it is speculative how firms will utilize resources no
longer needed to comply with the final rule.
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OMB’s implementing regulations (5 CFR
1320). The Corporation submitted the
information collection requirements to
OMB at the proposed rule stage. OMB
filed a comment assigning the
Corporation OMB control number 3064–
0210 and requested that the Corporation
make a submission to OMB after the
proposed rule is finalized. The Board
has reviewed the final rule under the
authority delegated to the Board by
OMB. The agencies did not receive any
comments on the PRA.
Proposed Information Collection
Title of Information Collection:
Reporting Requirements Associated
with Resolution Planning.
Agency Form Number: FR QQ.
OMB Control Number: 7100–0346.
Number of
respondents 54
FR QQ
59215
Frequency of Response: Biennially,
Triennially.
Respondents: Bank holding
companies 53 with assets of $250 billion
or more, bank holding companies with
$100 billion or more with certain
characteristics specified in the
preamble, and nonbank financial firms
designated by the Council for
supervision by the Board.
Annual
frequency
Estimated
average hours
per response
Estimated
annual burden
hours
Current 55
Reduced Reporters ..........................................................................................
December Filers:
Tailored Reporters:
Domestic ............................................................................................
Foreign ..............................................................................................
Full Reporters:
Domestic ...................................................................................................
Foreign ......................................................................................................
Complex Filers:
Domestic ...................................................................................................
Foreign ......................................................................................................
71
1
60
4,260
12
5
1
1
9,000
1,130
108,000
5,650
3
6
1
1
26,000
2,000
78,000
12,000
8
4
1
1
56 79,522
55,500
636,176
222,000
........................
........................
........................
1,066,086
Triennial Reduced ............................................................................................
Triennial Full:
Complex Foreign ......................................................................................
Foreign and Domestic ..............................................................................
Biennial Filers:
Domestic ...................................................................................................
Waivers 57 ........................................................................................................
53
1
20
1,060
4
9
1
1
13,135
5,667
52,540
51,003
8
2
1
1
40,115
1
320,920
2
Proposed Total .........................................................................................
........................
........................
........................
425,525
Change ..............................................................................................
........................
........................
........................
¥640,561
Current Total .....................................................................................
Final Rule
The Regulatory Flexibility Act (RFA)
generally requires that, in connection
with a final rulemaking, an agency
prepare and make available for public
comment a final regulatory flexibility
analysis describing the impact of the
proposed rule on small entities.58
However, a regulatory flexibility
analysis is not required if the agency
certifies that the final rule will not have
a significant economic impact on a
substantial number of small entities.
The Small Business Administration
(SBA) has defined ‘‘small entities’’ to
include banking organizations with total
assets of less than or equal to $600
million that are independently owned
and operated or owned by a holding
company with less than or equal to $600
million in total assets.59 For the reasons
described below and under section
605(b) of the RFA, the agencies certify
that the final rule will not have a
significant economic impact on a
substantial number of small entities. As
of March 31, 2019, there were 4,004
53 This includes any 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 meets the relevant total consolidated
assets threshold.
54 Of these respondents, none are small entities as
defined by the Small Business Administration (i.e.,
entities with less than $600 million in total assets)
www.sba.gov/document/support-table-sizestandards.
55 As of March 31, 2019.
56 This estimate captures the annual time that
complex domestic filers will spend complying with
this collection, given that these filers will only
submit two resolution plans over the three-year
period covered by this notice. The estimate
therefore represents two-thirds of the time these
firms are estimated to spend on each resolution
plan submission.
57 The agencies cannot reasonably estimate how
many of the firms that file resolution plans may
submit waiver requests, nor how long it would take
to prepare a waiver request. Accordingly, the
agencies are including this line as a placeholder. To
facilitate the split of the burden between the
agencies, this placeholder has been adjusted to two
estimated annual burden hours in the final rule.
58 5 U.S.C. 601 et seq.
59 The SBA defines a small banking organization
as having $600 million or less in assets, where an
organization’s ‘‘assets are determined by averaging
the assets reported on its four quarterly financial
statements for the preceding year.’’ See 13 CFR
121.201 as amended by Small Business Size
Standards: Adjustment of Monetary-Based Size
Standards for Inflation, 84 FR 34261 (July 18, 2019)
(effective August 19, 2019). In its determination, the
‘‘SBA counts the receipts, employees, or other
measure of size of the concern whose size is at issue
and all of its domestic and foreign affiliates.’’ See
13 CFR 121.103. Following these regulations, the
agencies use a covered entity’s affiliated and
acquired assets, averaged over the preceding four
quarters, to determine whether the covered entity
is ‘‘small’’ for the purposes of RFA.
The agencies did not receive any
comments on their proposed revisions
to this information collection.
Accordingly, with the exception of
minor technical adjustments, the
information collection revisions are
adopted as proposed in the proposal
and replicated in the chart above.
B. Regulatory Flexibility Act
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insured depository institutions and
approximately 3,198 bank holding
companies that would fit the SBA’s
current definition of ‘‘small entity’’ for
purposes of the RFA.
As discussed in detail above, section
165(d) of the Dodd-Frank Act requires
certain financial companies to report
periodically to the agencies their plans
for rapid and orderly resolution under
the Bankruptcy Code in the event of
material financial distress or failure.
This provision of the Dodd-Frank Act
was amended by EGRRCPA in 2018.
Specifically, EGRRCPA raised the $50
billion minimum asset threshold for
general application of the resolution
planning requirement to $250 billion in
total consolidated assets, and provided
the Board with discretion to apply the
resolution planning requirement to
firms with $100 billion or more and less
than $250 billion in total consolidated
assets. EGRRCPA also provides that any
bank holding company, regardless of
asset size, that has been identified as a
U.S. GSIB under the Board’s U.S. GSIB
surcharge rule shall be considered a
bank holding company with $250
billion or more in total consolidated
assets for purposes of the application of
the resolution planning requirement.
In accordance with section 165(d) of
the Dodd-Frank Act as amended by
EGRRCPA, the Board is amending
Regulation QQ 60 and the Corporation is
amending part 381 61 to amend the
requirement that a covered company
periodically submit a resolution plan to
the Board and Corporation.62 The final
rule also modifies the procedures for
joint review of a resolution plan by the
agencies. The reasons and justification
for the final rule are described in the
preamble.
As discussed in the preamble, the
final rule applies to covered companies,
which include only bank holding
companies and foreign banking
organizations with at least $100 billion
in total consolidated assets, and
nonbank financial companies that the
Council has determined under section
113 of the Dodd-Frank Act must be
supervised by the Board and for which
such determination is in effect. The
assets of a covered company
substantially exceed the $600 million
asset threshold under which a banking
organization is considered a ‘‘small
entity’’ under SBA regulations.63
60 12
CFR part 243.
CFR part 381.
62 12 U.S.C. 5365(d).
63 The Dodd-Frank Act provides that the Board
may, on the recommendation of the Council,
increase the asset threshold for the application of
the resolution planning requirements. 12 U.S.C.
61 12
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The final rule also applies to a
nonbank financial company designated
by the Council for supervision by the
Board under section 113 of the DoddFrank Act, regardless of such a
company’s asset size. As of the date of
the adoption of the final rule, there are
no such nonbank financial companies
supervised by the Board. Although the
asset size of nonbank financial
companies may not be the sole
determinative factor of whether such
companies may pose systemic risks and
would be designated by the Council for
supervision by the Board, it is one
consideration.64 It therefore may be
unlikely that a financial firm that is at
or below the $600 million asset
threshold would be designated by the
Council under section 113 of the DoddFrank Act.
Because the final rule is not likely to
apply to any company with assets of
$600 million or less, it is not expected
to apply to any small entity for purposes
of the RFA. The agencies do not believe
that the final rule duplicates, overlaps,
or conflicts with any other Federal
rules.
In light of the foregoing, the Board
and the Corporation certify that the final
rule will not have a significant
economic impact on a substantial
number of small entities supervised.
C. Riegle Community Development and
Regulatory Improvement Act of 1994
Pursuant to section 302(a) of the
Riegle Community Development and
Regulatory Improvement Act
(RCDRIA),65 in determining the effective
date and administrative compliance
requirements for new regulations that
impose additional reporting, disclosure,
or other requirements on insured
depository institutions (IDIs), each
Federal banking agency must consider,
consistent with principles of safety and
soundness and the public interest, any
administrative burdens that such
regulations would place on depository
institutions, including small depository
institutions, and customers of
depository institutions, as well as the
benefits of such regulations. In addition,
section 302(b) of RCDRIA requires new
regulations and amendments to
regulations that impose additional
reporting, disclosures, or other new
requirements on IDIs generally to take
effect on the first day of a calendar
quarter that begins on or after the date
on which the regulations are published
in final form.66
Because the final rule would not
impose additional reporting, disclosure,
or other requirements on IDIs, section
302 of the RCDRIA therefore does not
apply.
D. Plain Language
Section 722 of the Gramm-LeachBliley Act 67 requires the Federal
banking agencies to use plain language
in all proposed and final rules
published after January 1, 2000. The
agencies have sought to present the final
rule in a simple and straightforward
manner, and did not receive any
comments on plain language.
E. The Congressional Review Act
For purposes of Congressional Review
Act, the OMB makes a determination as
to whether a final rule constitutes a
‘‘major’’ rule.68 If a rule is deemed a
‘‘major rule’’ by the Office of
Management and Budget (OMB), the
Congressional Review Act generally
provides that the rule may not take
effect until at least 60 days following its
publication.69
The Congressional Review Act defines
a ‘‘major rule’’ as any rule that the
Administrator of the Office of
Information and Regulatory Affairs of
the OMB finds has resulted in or is
likely to result in (A) an annual effect
on the economy of $100,000,000 or
more; (B) a major increase in costs or
prices for consumers, individual
industries, Federal, State, or local
government agencies or geographic
regions, or (C) significant adverse effects
on competition, employment,
investment, productivity, innovation, or
on the ability of United States-based
enterprises to compete with foreignbased enterprises in domestic and
export markets.70
The OMB has determined that the
final rule is not a ‘‘major rule’’ within
the meaning of the Congressional
Review Act. As required by the
Congressional Review Act, the agencies
will submit the final rule and other
appropriate reports to Congress and the
Government Accountability Office for
review.
Text of the Common Rules
(All Agencies)
The text of the common rules appears
below:
■
66 12
5365(a)(2)(B). However, neither the Board nor the
Council has the authority to lower such threshold.
64 12 CFR 1310.11.
65 12 U.S.C. 4802(a).
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U.S.C. 4802.
U.S.C. 4809(a).
68 5 U.S.C. 801 et seq.
69 5 U.S.C. 801(a)(3).
70 5 U.S.C. 804(2).
67 12
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PART [
]—RESOLUTION PLANS
Sec.
ll.1 Authority and scope.
ll.2 Definitions.
ll.3 Critical operations.
ll.4 Resolution plan required.
ll.5 Informational content of a full
resolution plan.
ll.6 Informational content of a targeted
resolution plan.
ll.7 Informational content of a reduced
resolution plan.
ll.8 Review of resolution plans;
resubmission of deficient resolution
plans.
ll.9 Failure to cure deficiencies on
resubmission of a resolution plan.
ll.10 Consultation.
ll.11 No limiting effect or private right of
action; confidentiality of resolution
plans.
ll.12 Enforcement.
§ ll.1
Authority and scope.
(a) Authority. This part is issued
pursuant to section 165(d)(8) of the
Dodd-Frank Wall Street Reform and
Consumer Protection Act (Pub. L. 111–
203, 124 Stat. 1376, 1426–1427), as
amended by the Economic Growth,
Regulatory Relief, and Consumer
Protection Act (Pub. L. 115–174, 132
Stat. 1296) (the Dodd-Frank Act), 12
U.S.C. 5365(d)(8), which requires the
Board of Governors of the Federal
Reserve System (Board) and the Federal
Deposit Insurance Corporation
(Corporation) to jointly issue rules
implementing the provisions of section
165(d) of the Dodd-Frank Act.
(b) Scope. This part applies to each
covered company and establishes rules
and requirements regarding the
submission and content of a resolution
plan, as well as procedures for review
by the Board and Corporation of a
resolution plan.
§ ll.2
Definitions.
For purposes of this part:
Bankruptcy Code means Title 11 of
the United States Code.
Biennial filer is defined in
§ ll.4(a)(1).
Category II banking organization
means a covered company that is a
category II banking organization
pursuant to § 252.5 of this title.
Category III banking organization
means a covered company that is a
category III banking organization
pursuant to § 252.5 of this title.
Company means a corporation,
partnership, limited liability company,
depository institution, business trust,
special purpose entity, association, or
similar organization, but does not
include any organization, the majority
of the voting securities of which are
owned by the United States.
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Control. A company controls another
company when the first company,
directly or indirectly, owns, or holds
with power to vote, 25 percent or more
of any class of the second company’s
outstanding voting securities.
Core business lines means those
business lines of the covered company,
including associated operations,
services, functions and support, that, in
the view of the covered company, upon
failure would result in a material loss of
revenue, profit, or franchise value.
Core elements mean the information
required to be included in a full
resolution plan pursuant to § ll.5(c),
(d)(1)(i), (iii), and (iv), (e)(1)(ii), (e)(2),
(3), and (5), (f)(1)(v), and (g) regarding
capital, liquidity, and the covered
company’s plan for executing any
recapitalization contemplated in its
resolution plan, including updated
quantitative financial information and
analyses important to the execution of
the covered company’s resolution
strategy.
Council means the Financial Stability
Oversight Council established by
section 111 of the Dodd-Frank Act (12
U.S.C. 5321).
Covered company—(1) In general. A
covered company means:
(i) Any nonbank financial company
supervised by the Board;
(ii) Any global systemically important
BHC;
(iii) Any bank holding company, as
that term is defined in section 2 of the
Bank Holding Company Act, as
amended (12 U.S.C. 1841), and part 225
of this title (the Board’s Regulation Y),
that has $250 billion or more in total
consolidated assets, as determined
based on the average of the company’s
four most recent Consolidated Financial
Statements for Holding Companies as
reported on the Federal Reserve’s Form
FR Y–9C; provided that in the case of
a company whose total consolidated
assets have increased as the result of a
merger, acquisition, combination, or
similar transaction, the Board and the
Corporation may alternatively consider,
in their discretion, to the extent and in
the manner the Board and the
Corporation jointly consider to be
appropriate, one or more of the four
most recent Consolidated Financial
Statements for Holding Companies as
reported on the Federal Reserve’s Form
FR Y–9C or Capital and Asset Reports
for Foreign Banking Organizations as
reported on the Federal Reserve’s Form
FR Y–7Q of the companies that were
party to the merger, acquisition,
combination or similar transaction;
(iv) Any foreign bank or company that
is a bank holding company or is treated
as a bank holding company under
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59217
section 8(a) of the International Banking
Act of 1978 (12 U.S.C. 3106(a)), and that
has $250 billion or more in total
consolidated assets, as determined
annually based on the foreign bank’s or
company’s most recent annual or, as
applicable, quarterly based on the
average of the foreign bank’s or
company’s four most recent quarterly
Capital and Asset Reports for Foreign
Banking Organizations as reported on
the Federal Reserve’s Form FR Y–7Q;
provided that in the case of a company
whose total consolidated assets have
increased as the result of a merger,
acquisition, combination, or similar
transaction, the Board and the
Corporation may alternatively consider,
in their discretion, to the extent and in
the manner the Board and the
Corporation jointly consider to be
appropriate, one or more of the four
most recent Consolidated Financial
Statements for Holding Companies as
reported on the Federal Reserve’s Form
FR Y–9C or Capital and Asset Reports
for Foreign Banking Organizations as
reported on the Federal Reserve’s Form
FR Y–7Q of the companies that were
party to the merger, acquisition,
combination or similar transaction; and
(v) Any additional covered company
as determined pursuant to § 243.13.
(2) Cessation of covered company
status for nonbank financial companies
supervised by the Board and global
systemically important BHCs. Once a
covered company meets the
requirements described in paragraph
(1)(i) or (ii) of this definition of covered
company, the company shall remain a
covered company until it no longer
meets any of the requirements described
in paragraph (1) of this definition of
covered company.
(3) Cessation of covered company
status for other covered companies.
Once a company meets the requirements
described in paragraph (1)(iii) or (iv) of
this definition of covered company, the
company shall remain a covered
company until—
(i) In the case of a covered company
described in paragraph (1)(iii) of this
definition of covered company or a
covered company described in
paragraph (1)(iv) of this definition of
covered company that files quarterly
Capital and Asset Reports for Foreign
Banking Organizations on the Federal
Reserve’s Form FR Y–7Q, the company
has reported total consolidated assets
that are below $250 billion for each of
four consecutive quarters, as determined
based on its total consolidated assets as
reported on each of its four most recent
Consolidated Financial Statements for
Holding Companies on the Federal
Reserve’s Form FR Y–9C or Capital and
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Asset Reports for Foreign Banking
Organizations on the Federal Reserve’s
Form FR Y–7Q, as applicable; or
(ii) In the case of a covered company
described in paragraph (1)(iv) of this
definition of covered company that does
not file quarterly Capital and Asset
Reports for Foreign Banking
Organizations on the Federal Reserve’s
Form FR Y–7Q, the company has
reported total consolidated assets that
are below $250 billion for each of two
consecutive years, as determined based
on its total consolidated assets as
reported on each of its two most recent
annual Capital and Asset Reports for
Foreign Banking Organizations on the
Federal Reserve’s Form FR Y–7Q, or
such earlier time as jointly determined
by the Board and the Corporation.
(4) Multi-tiered holding company. In a
multi-tiered holding company structure,
covered company means the top-tier of
the multi-tiered holding company
unless the Board and the Corporation
jointly identify a different holding
company to satisfy the requirements
that apply to the covered company. In
making this determination, the Board
and the Corporation shall consider:
(i) The ownership structure of the
foreign banking organization, including
whether the foreign banking
organization is owned or controlled by
a foreign government;
(ii) Whether the action would be
consistent with the purposes of this
part; and
(iii) Any other factors that the Board
and the Corporation determine are
relevant.
(5) Asset threshold for bank holding
companies and foreign banking
organizations. The Board may, pursuant
to a recommendation of the Council,
raise any asset threshold specified in
paragraph (1)(iii) or (iv) of this
definition of covered company.
(6) Exclusion. A bridge financial
company chartered pursuant to 12
U.S.C. 5390(h) shall not be deemed to be
a covered company hereunder.
Critical operations means those
operations of the covered company,
including associated services, functions
and support, the failure or
discontinuance of which would pose a
threat to the financial stability of the
United States.
Deficiency is defined in § ll.8(b).
Depository institution has the same
meaning as in section 3(c)(1) of the
Federal Deposit Insurance Act (12
U.S.C. 1813(c)(1)) and includes a statelicensed uninsured branch, agency, or
commercial lending subsidiary of a
foreign bank.
Foreign banking organization
means—
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(1) A foreign bank, as defined in
section 1(b)(7) of the International
Banking Act of 1978 (12 U.S.C. 3101(7)),
that:
(i) Operates a branch, agency, or
commercial lending company
subsidiary in the United States;
(ii) Controls a bank in the United
States; or
(iii) Controls an Edge corporation
acquired after March 5, 1987; and
(2) Any company of which the foreign
bank is a subsidiary.
Foreign-based covered company
means any covered company that is not
incorporated or organized under the
laws of the United States.
Full resolution plan means a full
resolution plan described in § ll.5.
Functionally regulated subsidiary has
the same meaning as in section 5(c)(5)
of the Bank Holding Company Act, as
amended (12 U.S.C. 1844(c)(5)).
Global systemically important BHC
means a covered company that is a
global systemically important BHC
pursuant to § 252.5 of this title.
Identified critical operations means
the critical operations of the covered
company identified by the covered
company or jointly identified by the
Board and the Corporation under
§ ll.3(b)(2).
Material change means an event,
occurrence, change in conditions or
circumstances, or other change that
results in, or could reasonably be
foreseen to have, a material effect on:
(1) The resolvability of the covered
company;
(2) The covered company’s resolution
strategy; or
(3) How the covered company’s
resolution strategy is implemented.
Such changes include, but are not
limited to:
(i) The identification of a new critical
operation or core business line;
(ii) The identification of a new
material entity or the de-identification
of a material entity;
(iii) Significant increases or decreases
in the business, operations, or funding
or interconnections of a material entity;
or
(iv) Changes in the primary regulatory
authorities of a material entity or the
covered company on a consolidated
basis.
Material entity means a subsidiary or
foreign office of the covered company
that is significant to the activities of an
identified critical operation or core
business line, or is financially or
operationally significant to the
resolution of the covered company.
Material financial distress with regard
to a covered company means that:
(1) The covered company has
incurred, or is likely to incur, losses that
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will deplete all or substantially all of its
capital, and there is no reasonable
prospect for the company to avoid such
depletion;
(2) The assets of the covered company
are, or are likely to be, less than its
obligations to creditors and others; or
(3) The covered company is, or is
likely to be, unable to pay its obligations
(other than those subject to a bona fide
dispute) in the normal course of
business.
Nonbank financial company
supervised by the Board means a
nonbank financial company or other
company that the Council has
determined under section 113 of the
Dodd-Frank Act (12 U.S.C. 5323) shall
be supervised by the Board and for
which such determination is still in
effect.
Rapid and orderly resolution means a
reorganization or liquidation of the
covered company (or, in the case of a
covered company that is incorporated or
organized in a jurisdiction other than
the United States, the subsidiaries and
operations of such foreign company that
are domiciled in the United States)
under the Bankruptcy Code that can be
accomplished within a reasonable
period of time and in a manner that
substantially mitigates the risk that the
failure of the covered company would
have serious adverse effects on financial
stability in the United States.
Reduced resolution plan means a
reduced resolution plan described in
§ ll.7.
Shortcoming is defined in § ll.8(e).
Subsidiary means a company that is
controlled by another company, and an
indirect subsidiary is a company that is
controlled by a subsidiary of a company.
Targeted resolution plan means a
targeted resolution plan described in
§ ll.6.
Triennial full filer is defined in
§ ll.4(b)(1).
Triennial reduced filer is defined in
§ ll.4(c)(1).
United States means the United States
and includes any state of the United
States, the District of Columbia, any
territory of the United States, Puerto
Rico, Guam, American Samoa, and the
Virgin Islands.
§ ll.3
Critical operations.
(a) Identification of critical operations
by covered companies—(1) Process and
methodology required. (i) Each biennial
filer and triennial full filer shall
establish and implement a process
designed to identify each of its critical
operations. After July 1, 2022, each
triennial reduced filer that has any
identified critical operation shall
establish and implement a process
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designed to identify each of its critical
operations. The scale of the process
must be appropriate to the nature, size,
complexity, and scope of the covered
company’s operations. The covered
company must review its process
periodically and update it as necessary
to ensure its continued effectiveness.
The covered company shall describe its
process and how it is applied as part of
its corporate governance relating to
resolution planning under § ll.5(d)(1).
The covered company must conduct the
process described in this paragraph
(a)(1) sufficiently in advance of its next
resolution plan submission so that the
covered company is prepared to submit
the information required under
§§ ll.5 through ll.7 for each
identified critical operation.
(ii) The process required under
paragraph (a)(1)(i) of this section must
include a methodology for evaluating
the covered company’s participation in
activities and markets that may be
critical to the financial stability of the
United States. The methodology must be
designed, taking into account the
nature, size, complexity, and scope of
the covered company’s operations, to
identify and assess:
(A) The markets and activities in
which the covered company participates
or has operations;
(B) The significance of those markets
and activities with respect to the
financial stability of the United States;
and
(C) The significance of the covered
company as a provider or other
participant in those markets and
activities.
(2) Waiver requests. A covered
company that has previously submitted
a resolution plan under this part may
request a waiver of the requirement to
have a process and methodology under
paragraph (a)(1) of this section by
submitting a waiver request in
accordance with this paragraph (a)(2) if
the covered company does not have an
identified critical operation as of the
date it submits the waiver request.
(i) Each waiver request shall be
divided into a public section and a
confidential section. A covered
company shall segregate and separately
identify the public section from the
confidential section. A covered
company shall include in the
confidential section of a waiver request
its rationale for why a waiver of the
requirement would be appropriate,
including an explanation of why the
process and methodology are not likely
to identify any critical operation given
its business model, operations, and
organizational structure. A covered
company shall describe in the public
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section of a waiver request that it is
seeking to waive the requirement.
(ii) Any waiver request must be made
in writing no later than 18 months
before the date by which the covered
company is required to submit its next
resolution plan. Notwithstanding the
foregoing, with respect to any resolution
plan that a covered company is required
to submit on or before July 1, 2021, any
waiver request must be made in writing
no later than 17 months before that date.
(iii) The Board and Corporation may
jointly approve or deny a waiver request
in their discretion. Unless the Board and
the Corporation have jointly approved a
waiver request, the waiver request will
be deemed denied on the date that is 12
months before the date by which the
covered company is required to submit
the resolution plan that immediately
follows submission of the waiver
request.
(iv) An approved waiver request
under this paragraph (a)(2) is effective
for the resolution plan submission that
immediately follows submission of the
waiver request and for any resolution
plan submitted thereafter until, but not
including, the covered company’s next
full resolution plan submission.
(3) Limited exemption. A foreignbased covered company is exempt from
the requirement to have a process and
methodology under paragraph (a)(1) of
this section in connection with any
requirement to submit a resolution plan
on or before July 1, 2021 if the foreignbased covered company does not have
an identified critical operation as of the
date that is 17 months before the date
by which the covered company is
required to submit the resolution plan.
(b) Joint identification of critical
operations by the Board and the
Corporation. (1) The Board and the
Corporation shall, not less frequently
than every six years, jointly review the
operations of covered companies to
determine whether to jointly identify
critical operations of any covered
company in accordance with paragraph
(b)(2) of this section, or to jointly
rescind any currently effective joint
identification in accordance with
paragraph (b)(3) of this section.
(2) If the Board and the Corporation
jointly identify a covered company’s
operation as a critical operation, the
Board and the Corporation shall jointly
notify the covered company in writing.
A covered company is not required to
include the information required under
§§ ll.5 through ll.7 for the
identified critical operation in any
resolution plan that the covered
company is required to submit within
12 months after the joint notification
unless the operation had been identified
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59219
by the covered company as a critical
operation on or before the date the
Board and the Corporation jointly
notified the covered company.
(3) The Board and the Corporation
may jointly rescind a joint identification
under paragraph (b)(2) of this section by
providing the covered company with
joint notice of the rescission. Upon the
notification, the covered company is not
required to include the information
regarding the operation required for
identified critical operations under
§§ ll.5 through ll.7 in any
subsequent resolution plan unless:
(i) The covered company identifies
the operation as a critical operation; or
(ii) The Board and the Corporation
subsequently provide a joint notification
under paragraph (b)(2) of this section to
the covered company regarding the
operation.
(4) A joint notification provided by
the Board and the Corporation to a
covered company before [effective date
of final rule] that identifies any of its
operations as a critical operation and
not previously jointly rescinded is
deemed to be a joint identification
under paragraph (b)(2) of this section.
(c) Request for reconsideration of
jointly identified critical operations. A
covered company may request that the
Board and the Corporation reconsider a
joint identification under paragraph
(b)(2) of this section in accordance with
this paragraph (c).
(1) Written request for
reconsideration. The covered company
must submit a written request for
reconsideration to the Board and the
Corporation that includes a clear and
complete statement of all arguments and
all relevant, material information that
the covered company expects to have
considered. If a covered company has
previously requested reconsideration
regarding the operation, the written
request must also describe the material
differences between the new request
and the most recent prior request.
(2) Timing. (i) If a covered company
submits a request for reconsideration on
or before the date that is 18 months
before the date by which it is required
to submit its next resolution plan, the
Board and the Corporation will
complete their reconsideration no later
than 12 months before the date by
which the covered company is required
to submit its next resolution plan.
Notwithstanding the foregoing, if the
Board and the Corporation jointly find
that additional information from the
covered company is required to
complete their reconsideration, the
Board and the Corporation will jointly
request in writing the additional
information from the covered company.
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The Board and the Corporation will
then complete their reconsideration no
later than the later of:
(A) Ninety (90) days after receipt of all
additional information from the covered
company; and
(B) Twelve (12) months before the
date by which the covered company is
required to submit its next resolution
plan.
(ii) If a covered company submits a
request for reconsideration less than 18
months before the date by which it is
required to submit its next resolution
plan, the Board and the Corporation
may, in their discretion, defer
reconsideration of the joint
identification until after the submission
of that resolution plan, with the result
that the covered company must include
the identified critical operation in that
resolution plan and the Board and the
Corporation will complete their
reconsideration in accordance with
paragraph (c)(2)(i) of this section as
though the covered company had
submitted the request after the date by
which the covered company is required
to submit that resolution plan.
(3) Joint communication following
reconsideration. The Board and the
Corporation will communicate jointly
the results of their reconsideration in
writing to the covered company.
(d) De-identification by covered
company of self-identified critical
operations. A covered company may
cease to include in its resolution plans
the information required under
§§ ll.5 through ll.7 regarding an
operation previously identified only by
the covered company (and not also
jointly by the Board and the
Corporation) as a critical operation only
in accordance with this paragraph (d).
(1) Notice of de-identification. If a
covered company ceases to identify an
operation as a critical operation, the
covered company must notify the Board
and the Corporation of its deidentification. The notice must be in
writing and include a clear and
complete explanation of:
(i) Why the covered company
previously identified the operation as a
critical operation; and
(ii) Why the covered company no
longer identifies the operation as a
critical operation.
(2) Timing. Notwithstanding a
covered company’s de-identification,
and unless otherwise notified in writing
jointly by the Board and the
Corporation, a covered company shall
include the applicable information
required under §§ ll.5 through
§ ll.7 regarding an operation
previously identified by the covered
company as a critical operation in any
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resolution plan the covered company is
required to submit during the period
ending 12 months after the covered
company notifies the Board and the
Corporation in accordance with
paragraph (d)(1) of this section.
(3) No effect on joint identifications.
Neither a covered company’s deidentification nor notice thereof under
paragraph (d)(1) of this section rescinds
a joint identification made by the Board
and the Corporation under paragraph
(b)(2) of this section.
§ ll.4
Resolution plan required.
(a) Biennial filers—(1) Group
members. Biennial filer means:
(i) Any global systemically important
BHC; and
(ii) Any nonbank financial company
supervised by the Board that has not
been jointly designated a triennial full
filer by the Board and Corporation
under paragraph (a)(2) of this section or
that has been jointly re-designated a
biennial filer by the Board and the
Corporation under paragraph (a)(2) of
this section.
(2) Nonbank financial companies.
The Board and the Corporation may
jointly designate a nonbank financial
company supervised by the Board as a
triennial full filer in their discretion,
taking into account facts and
circumstances that each of the Board
and the Corporation in its discretion
determines to be relevant. The Board
and the Corporation may in their
discretion jointly re-designate as a
biennial filer a nonbank financial
company that the Board and the
Corporation had previously designated
as a triennial filer, taking into account
facts and circumstances that each of the
Board and the Corporation in its
discretion determines to be relevant.
(3) Frequency of submission. Biennial
filers shall each submit a resolution
plan to the Board and the Corporation
every two years.
(4) Submission date. Biennial filers
shall submit their resolution plans on or
before July 1 of each year in which a
resolution plan is due.
(5) Type of resolution plan required to
be submitted. Biennial filers shall
alternate submitting a full resolution
plan and a targeted resolution plan.
(6) New covered companies that are
biennial filers. A company that becomes
a covered company and a biennial filer
after [effective date of final rule] shall
submit a full resolution plan on or
before the next date by which the other
biennial filers are required to submit
resolution plans pursuant to paragraph
(a)(4) of this section that occurs no
earlier than 12 months after the date as
of which the company became a covered
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company. The company’s subsequent
resolution plans shall be of the type
required to be submitted by the other
biennial filers.
(b) Triennial full filers—(1) Group
members. Triennial full filer means:
(i) Any category II banking
organization;
(ii) Any category III banking
organization; and
(iii) Any nonbank financial company
supervised by the Board that is jointly
designated a triennial full filer by the
Board and Corporation under paragraph
(a)(2) of this section.
(2) Frequency of submission.
Triennial full filers shall each submit a
resolution plan to the Board and the
Corporation every three years.
(3) Submission date. Triennial full
filers shall submit their resolution plans
on or before July 1 of each year in which
a resolution plan is due.
(4) Type of resolution plan required to
be submitted. Triennial full filers shall
alternate submitting a full resolution
plan and a targeted resolution plan.
(5) New covered companies that are
triennial full filers. A company that
becomes a covered company and a
triennial full filer after [effective date of
final rule] shall submit a full resolution
plan on or before the next date by which
the other triennial full filers are required
to submit resolution plans pursuant to
paragraph (b)(3) of this section that
occurs no earlier than 12 months after
the date as of which the company
became a covered company. The
company’s subsequent resolution plans
shall be of the type required to be
submitted by the other triennial full
filers.
(c) Triennial reduced filers—(1) Group
members. Triennial reduced filer means
any covered company that is not a
global systemically important BHC,
nonbank financial company supervised
by the Board, category II banking
organization, or category III banking
organization.
(2) Frequency of submission.
Triennial reduced filers shall each
submit a resolution plan to the Board
and the Corporation every three years.
(3) Submission date. Triennial
reduced filers shall submit their
resolution plans on or before July 1 of
each year in which a resolution plan is
due.
(4) Type of resolution plan required to
be submitted. Triennial reduced filers
shall submit a reduced resolution plan.
(5) New covered companies that are
triennial reduced filers. A company that
becomes a covered company and a
triennial reduced filer after December
31, 2019 shall submit a full resolution
plan on or before the next date by which
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the other triennial reduced filers are
required to submit resolution plans
pursuant to paragraph (c)(3) of this
section that occurs no earlier than 12
months after the date as of which the
company became a covered company.
The company’s subsequent resolution
plans shall be reduced resolution plans.
(d) General—(1) Changing filing
groups. If a covered company that is a
member of a filing group specified in
paragraphs (a) through (c) of this section
(‘‘original group filer’’) becomes a
member of a different filing group
specified in paragraphs (a) through (c) of
this section (‘‘new group filer’’), then
the covered company shall submit its
next resolution plan as follows:
(i) If the next date by which the
original group filers are required to
submit their next resolution plans is the
same date by which the other new group
filers are required to submit their next
resolution plans and:
(A) That date is less than 12 months
after the date as of which the covered
company became a new group filer, the
covered company shall submit its next
resolution plan on or before that date.
The resolution plan may be the type of
resolution plan that the original group
filers are required to submit on or before
that date or the type of resolution plan
that the other new group filers are
required to submit on or before that
date.
(B) That date is 12 months or more
after the date as of which the covered
company became a new group filer, the
covered company shall submit on or
before that date the type of resolution
plan the other new group filers are
required to submit on or before that
date.
(ii) If the next date by which the
original group filers are required to
submit their next resolution plans is
different from the date by which the
new group filers are required to submit
their next resolution plans, the covered
company shall submit its next
resolution plan on or before the next
date by which the other new group filers
are required to submit a resolution plan
that occurs no earlier than 12 months
after the date as of which the covered
company became a new group filer. The
covered company shall submit the type
of resolution plan that the other new
group filers are required to submit on or
before the date the covered company is
required to submit its next resolution
plan.
(iii) Notwithstanding paragraph
(d)(1)(i) or (ii) of this section, any
triennial reduced filer that becomes a
biennial filer or a triennial full filer
shall submit a full resolution plan on or
before the next date by which the other
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new group filers are required to submit
their next resolution plans that occurs
no earlier than 12 months after the date
as of which the covered company
became a new group filer. After
submitting a full resolution plan, the
covered company shall submit, on or
before the next date that the other new
group filers are required to submit their
next resolution plans, the type of
resolution plan the other new group
filers are required to submit on or before
that date.
(2) Altering submission dates.
Notwithstanding anything to the
contrary in this part, the Board and
Corporation may jointly determine that
a covered company shall submit its
resolution plan on or before a date other
than as provided in paragraphs (a)
through (c) or paragraph (d)(1) of this
section. The Board and the Corporation
shall provide a covered company with
written notice of a determination under
this paragraph (d)(2) no later than 12
months before the date by which the
covered company is required to submit
the resolution plan.
(3) Authority to require interim
updates. The Board and the Corporation
may jointly require that a covered
company submit an update to a
resolution plan submitted under this
part, within a reasonable amount of
time, as jointly determined by the Board
and Corporation. The Board and the
Corporation shall notify the covered
company of its requirement to submit an
update under this paragraph (d)(3) in
writing, and shall specify the portions
or aspects of the resolution plan the
covered company shall update.
(4) Notice of extraordinary events—(i)
In general. Each covered company shall
provide the Board and the Corporation
with a notice no later than 45 days after
any material merger, acquisition of
assets, or similar transaction or
fundamental change to the covered
company’s resolution strategy. Such
notice must describe the event and
explain how the event affects the
resolvability of the covered company.
The covered company shall address any
event with respect to which it has
provided notice pursuant to this
paragraph (d)(4)(i) in the following
resolution plan submitted by the
covered company.
(ii) Exception. A covered company
shall not be required to submit a notice
under paragraph (d)(4)(i) of this section
if the date by which the covered
company would be required to submit
the notice under paragraph (d)(4)(i) of
this section would be within 90 days
before the date by which the covered
company is required to submit a
resolution plan under this section.
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59221
(5) Authority to require a full
resolution plan submission.
Notwithstanding anything to the
contrary in this part, the Board and
Corporation may jointly require a
covered company to submit a full
resolution plan instead of a targeted
resolution plan or a reduced resolution
plan that the covered company is
otherwise required to submit under this
section. The Board and the Corporation
shall provide a covered company with
written notice of a determination under
this paragraph (d)(5) no later than 12
months before the date by which the
covered company is required to submit
the full resolution plan. The date on or
before which a full resolution plan must
be submitted under this paragraph (d)(5)
will be the date by which the covered
company would otherwise be required
to submit its upcoming targeted
resolution plan or reduced resolution
plan under paragraphs (a) through (c), or
(d)(1) or (2) of this section. The
requirement to submit a full resolution
plan under this paragraph (d)(5) does
not alter the type of resolution plan the
covered company will subsequently be
required to submit under this section.
(6) Waivers—(i) Authority to waive
requirements. The Board and the
Corporation may jointly waive one or
more of the resolution plan
requirements of § ll.5, § ll.6, or
§ ll.7 for one or more covered
companies for any number of resolution
plan submissions. A request pursuant to
paragraph (d)(6)(ii) of this section is not
required for the Board and Corporation
to exercise their authority under this
paragraph (d)(6)(i).
(ii) Waiver requests by covered
companies. In connection with the
submission of a full resolution plan, a
triennial full filer or triennial reduced
filer that has previously submitted a
resolution plan under this part may
request a waiver of one or more of the
informational content requirements of
§ ll.5 in accordance with this
paragraph (d)(6)(ii).
(A) A requirement to include any of
the following information is not eligible
for a waiver at the request of a triennial
full filer or triennial reduced filer:
(1) Information specified in section
165(d)(1)(A) through (C) of the DoddFrank Act (12 U.S.C. 5365(d)(1)(A)
through (C));
(2) Any core element;
(3) Information required to be
included in the public section of a full
resolution plan under § ll.11(c)(2);
(4) Information about the remediation
of any previously identified deficiency
or shortcoming unless the Board and the
Corporation have jointly determined
that the triennial full filer or triennial
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reduced filer has satisfactorily remedied
the deficiency or addressed the
shortcoming before its submission of the
waiver request; or
(5) Information about changes to the
triennial full filer or triennial reduced
filer’s last submitted resolution plan
resulting from any:
(i) Change in law or regulation;
(ii) Guidance or feedback from the
Board and the Corporation; or
(iii) Any material change experienced
by the triennial full filer or triennial
reduced filer since it submitted that
resolution plan.
(B) Each waiver request shall be
divided into a public section and a
confidential section. A triennial full
filer or triennial reduced filer shall
segregate and separately identify the
public section from the confidential
section.
(1) The triennial full filer or triennial
reduced filer shall include in the
confidential section of a waiver request
a clear and complete explanation of
why:
(i) Each requirement sought to be
waived is not a requirement described
in paragraph (d)(6)(ii)(A) of this section;
(ii) The information sought to be
waived would not be relevant to the
Board’s and Corporation’s review of the
triennial full filer or triennial reduced
filer’s next full resolution plan; and
(iii) A waiver of each requirement
would be appropriate.
(2) The triennial full filer or triennial
reduced filer shall include in the public
section of a waiver request a list of the
requirements that it is requesting be
waived.
(C) A triennial full filer or triennial
reduced filer may not make more than
one waiver request for any full
resolution plan submission and any
waiver request must be made in writing
no later than 18 months before the date
by which the triennial full filer or
triennial reduced filer is required to
submit the full resolution plan.
(D) The Board and Corporation may
jointly approve or deny a waiver
request, in whole or in part, in their
discretion. Unless the Board and the
Corporation have jointly approved a
waiver request, the waiver request will
be deemed denied on the date that is 12
months before the date by which the
triennial full filer or triennial reduced
filer is required to submit the full
resolution plan to which the waiver
request relates.
(E) An approved waiver request under
this paragraph (d)(6)(ii) is effective for
only the full resolution plan that
immediately follows submission of the
waiver request.
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(e) Access to information. In order to
allow evaluation of a resolution plan,
each covered company must provide the
Board and the Corporation such
information and access to personnel of
the covered company as the Board and
the Corporation jointly determine
during the period for reviewing the
resolution plan is necessary to assess
the credibility of the resolution plan and
the ability of the covered company to
implement the resolution plan. In order
to facilitate review of any waiver request
by a covered company under
§ ll.3(a)(2) or paragraph (d)(6)(ii) of
this section, or any joint identification
of a critical operation of a covered
company under § ll.3(b), each
covered company must provide such
information and access to personnel of
the covered company as the Board and
the Corporation jointly determine is
necessary to evaluate the waiver request
or whether the operation is a critical
operation. The Board and the
Corporation will rely to the fullest
extent possible on examinations
conducted by or on behalf of the
appropriate Federal banking agency for
the relevant company.
(f) Board of directors approval of
resolution plan. Before submission of a
resolution plan under paragraphs (a)
through (c) of this section, the
resolution plan of a covered company
shall be approved by:
(1) The board of directors of the
covered company and noted in the
minutes; or
(2) In the case of a foreign-based
covered company only, a delegee acting
under the express authority of the board
of directors of the covered company to
approve the resolution plan.
(g) Resolution plans provided to the
Council. The Board shall make the
resolution plans and updates submitted
by the covered company pursuant to
this section available to the Council
upon request.
(h) Required and prohibited
assumptions. In preparing its resolution
plan, a covered company shall:
(1) Take into account that the material
financial distress or failure of the
covered company may occur under the
severely adverse economic conditions
provided to the covered company by the
Board pursuant to 12 U.S.C.
5365(i)(1)(B);
(2) Not rely on the provision of
extraordinary support by the United
States or any other government to the
covered company or its subsidiaries to
prevent the failure of the covered
company, including any resolution
actions taken outside the United States
that would eliminate the need for any of
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a covered company’s U.S. subsidiaries
to enter into resolution proceedings; and
(3) With respect to foreign banking
organizations, not assume that the
covered company takes resolution
actions outside of the United States that
would eliminate the need for any U.S.
subsidiaries to enter into resolution
proceedings.
(i) Point of contact. Each covered
company shall identify a senior
management official at the covered
company responsible for serving as a
point of contact regarding the resolution
plan of the covered company.
(j) Incorporation of previously
submitted resolution plan information
by reference. Any resolution plan
submitted by a covered company may
incorporate by reference information
from a resolution plan previously
submitted by the covered company to
the Board and the Corporation, provided
that:
(1) The resolution plan seeking to
incorporate information by reference
clearly indicates:
(i) The information the covered
company is incorporating by reference;
and
(ii) Which of the covered company’s
previously submitted resolution plan(s)
originally contained the information the
covered company is incorporating by
reference and the specific location of the
information in the covered company’s
previously submitted resolution plan;
and
(2) The covered company certifies that
the information the covered company is
incorporating by reference remains
accurate in all respects that are material
to the covered company’s resolution
plan.
(k) Initial resolution plans after
effective date. (1) Notwithstanding
anything to the contrary in paragraphs
(a) through (c) or (d)(1) of this section,
each company that is a covered
company as of December 31, 2019 is
required to submit its initial resolution
plan after December 31, 2019, as
provided in this paragraph (k). The
submission date and resolution plan
type for each subsequent resolution plan
will be determined pursuant to
paragraphs (a) through (d) of this
section.
(i) Biennial filers. Each covered
company that is a biennial filer on
October 1, 2020 and remains a biennial
filer as of July 1, 2021, is required to
submit a targeted resolution plan
pursuant to paragraph (a)(4) of this
section on or before July 1, 2021.
(ii) Triennial full filers. Each covered
company that is a triennial full filer on
October 1, 2020 and remains a triennial
full filer as of July 1, 2021 is required
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to submit a targeted resolution plan
pursuant to paragraph (b)(3) of this
section on or before July 1, 2021.
(iii) Triennial reduced filers. Each
covered company that is a triennial
reduced filer on October 1, 2020 and
remains a triennial reduced filer as of
July 1, 2022 is required to submit a
reduced resolution plan pursuant to
paragraph (c)(3) of this section on or
before July 1, 2022.
(2) With respect to any company that
is a covered company as of December
31, 2019, and changes filings groups
specified in paragraphs (a) through (c) of
this section after October 1, 2020 and
before the date by which it would be
required to submit a resolution plan
under paragraph (k)(1) of this section,
the requirements for its initial
resolution plan after it changes filing
groups will be determined pursuant to
paragraph (d)(1) of this section.
(3) Notwithstanding anything to the
contrary in this paragraph (k), a covered
company that has been jointly directed
by the Board and the Corporation before
December 31, 2019, to submit a
resolution plan on or before July 1, 2020
describing changes it has made to its
most recent resolution plan submission
to address each shortcoming the
agencies identified in that resolution
plan shall submit a responsive
resolution plan on or before July 1, 2020
in addition to any resolution plan that
such covered company is otherwise
required to submit under this section.
The requirement to submit such a
resolution plan on or before July 1, 2020
does not alter the timing or type of
resolution plan any such covered
company is required to submit under
this section after July 1, 2020.
§ ll.5 Informational content of a full
resolution plan.
(a) In general—(1) Domestic covered
companies. A full resolution plan of a
covered company that is organized or
incorporated in the United States shall
include the information specified in
paragraphs (b) through (h) of this
section with respect to the subsidiaries
and operations that are domiciled in the
United States as well as the foreign
subsidiaries, offices, and operations of
the covered company.
(2) Foreign-based covered companies.
A full resolution plan of a covered
company that is organized or
incorporated in a jurisdiction other than
the United States (other than a bank
holding company) or that is a foreign
banking organization shall include:
(i) The information specified in
paragraphs (b) through (h) of this
section with respect to the subsidiaries,
branches and agencies, and identified
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critical operations and core business
lines, as applicable, that are domiciled
in the United States or conducted in
whole or material part in the United
States. With respect to the information
specified in paragraph (g) of this
section, the resolution plan of a foreignbased covered company shall also
identify, describe in detail, and map to
legal entity the interconnections and
interdependencies among the U.S.
subsidiaries, branches, and agencies,
and between those entities and:
(A) The identified critical operations
and core business lines of the foreignbased covered company; and
(B) Any foreign-based affiliate; and
(ii) A detailed explanation of how
resolution planning for the subsidiaries,
branches and agencies, and identified
critical operations and core business
lines of the foreign-based covered
company that are domiciled in the
United States or conducted in whole or
material part in the United States is
integrated into the foreign-based
covered company’s overall resolution or
other contingency planning process.
(b) Executive summary. Each full
resolution plan of a covered company
shall include an executive summary
describing:
(1) The key elements of the covered
company’s strategic plan for rapid and
orderly resolution in the event of
material financial distress at or failure of
the covered company;
(2) A description of each material
change experienced by the covered
company since the filing of the covered
company’s previously submitted
resolution plan (or affirmation that no
such material change has occurred);
(3) Changes to the covered company’s
previously submitted resolution plan
resulting from any:
(i) Change in law or regulation;
(ii) Guidance or feedback from the
Board and the Corporation; or
(iii) Material change described
pursuant to paragraph (b)(2) of this
section; and
(4) Any actions taken by the covered
company since filing of the previous
resolution plan to improve the
effectiveness of the covered company’s
resolution plan or remediate or
otherwise mitigate any material
weaknesses or impediments to effective
and timely execution of the resolution
plan.
(c) Strategic analysis. Each full
resolution plan shall include a strategic
analysis describing the covered
company’s plan for rapid and orderly
resolution in the event of material
financial distress or failure of the
covered company. Such analysis shall:
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59223
(1) Include detailed descriptions of
the:
(i) Key assumptions and supporting
analysis underlying the covered
company’s resolution plan, including
any assumptions made concerning the
economic or financial conditions that
would be present at the time the
covered company sought to implement
such plan;
(ii) Range of specific actions to be
taken by the covered company to
facilitate a rapid and orderly resolution
of the covered company, its material
entities, and its identified critical
operations and core business lines in
the event of material financial distress
or failure of the covered company;
(iii) Funding, liquidity and capital
needs of, and resources available to, the
covered company and its material
entities, which shall be mapped to its
identified critical operations and core
business lines, in the ordinary course of
business and in the event of material
financial distress at or failure of the
covered company;
(iv) Covered company’s strategy for
maintaining operations of, and funding
for, the covered company and its
material entities, which shall be
mapped to its identified critical
operations and core business lines;
(v) Covered company’s strategy in the
event of a failure or discontinuation of
a material entity, core business line or
identified critical operation, and the
actions that will be taken by the covered
company to prevent or mitigate any
adverse effects of such failure or
discontinuation on the financial
stability of the United States; provided,
however, if any such material entity is
subject to an insolvency regime other
than the Bankruptcy Code, a covered
company may exclude that entity from
its strategic analysis unless that entity
either has $50 billion or more in total
assets or conducts an identified critical
operation; and
(vi) Covered company’s strategy for
ensuring that any insured depository
institution subsidiary of the covered
company will be adequately protected
from risks arising from the activities of
any nonbank subsidiaries of the covered
company (other than those that are
subsidiaries of an insured depository
institution);
(2) Identify the time period(s) the
covered company expects would be
needed for the covered company to
successfully execute each material
aspect and step of the covered
company’s plan;
(3) Identify and describe any potential
material weaknesses or impediments to
effective and timely execution of the
covered company’s plan;
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(4) Discuss the actions and steps the
covered company has taken or proposes
to take to remediate or otherwise
mitigate the weaknesses or impediments
identified by the covered company,
including a timeline for the remedial or
other mitigatory action; and
(5) Provide a detailed description of
the processes the covered company
employs for:
(i) Determining the current market
values and marketability of the core
business lines, identified critical
operations, and material asset holdings
of the covered company;
(ii) Assessing the feasibility of the
covered company’s plans (including
timeframes) for executing any sales,
divestitures, restructurings,
recapitalizations, or other similar
actions contemplated in the covered
company’s resolution plan; and
(iii) Assessing the impact of any sales,
divestitures, restructurings,
recapitalizations, or other similar
actions on the value, funding, and
operations of the covered company, its
material entities, identified critical
operations and core business lines.
(d) Corporate governance relating to
resolution planning. Each full resolution
plan shall:
(1) Include a detailed description of:
(i) How resolution planning is
integrated into the corporate governance
structure and processes of the covered
company;
(ii) The covered company’s policies,
procedures, and internal controls
governing preparation and approval of
the covered company’s resolution plan;
(iii) The identity and position of the
senior management official(s) of the
covered company that is primarily
responsible for overseeing the
development, maintenance,
implementation, and filing of the
covered company’s resolution plan and
for the covered company’s compliance
with this part; and
(iv) The nature, extent, and frequency
of reporting to senior executive officers
and the board of directors of the covered
company regarding the development,
maintenance, and implementation of the
covered company’s resolution plan;
(2) Describe the nature, extent, and
results of any contingency planning or
similar exercise conducted by the
covered company since the date of the
covered company’s most recently filed
resolution plan to assess the viability of
or improve the resolution plan of the
covered company; and
(3) Identify and describe the relevant
risk measures used by the covered
company to report credit risk exposures
both internally to its senior management
and board of directors, as well as any
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relevant risk measures reported
externally to investors or to the covered
company’s appropriate Federal
regulator.
(e) Organizational structure and
related information. Each full resolution
plan shall:
(1) Provide a detailed description of
the covered company’s organizational
structure, including:
(i) A hierarchical list of all material
entities within the covered company’s
organization (including legal entities
that directly or indirectly hold such
material entities) that:
(A) Identifies the direct holder and
the percentage of voting and nonvoting
equity of each legal entity and foreign
office listed; and
(B) The location, jurisdiction of
incorporation, licensing, and key
management associated with each
material legal entity and foreign office
identified;
(ii) A mapping of the covered
company’s identified critical operations
and core business lines, including
material asset holdings and liabilities
related to such identified critical
operations and core business lines, to
material entities;
(2) Provide an unconsolidated balance
sheet for the covered company and a
consolidating schedule for all material
entities that are subject to consolidation
by the covered company;
(3) Include a description of the
material components of the liabilities of
the covered company, its material
entities, identified critical operations
and core business lines that, at a
minimum, separately identifies types
and amounts of the short-term and longterm liabilities, the secured and
unsecured liabilities, and subordinated
liabilities;
(4) Identify and describe the processes
used by the covered company to:
(i) Determine to whom the covered
company has pledged collateral;
(ii) Identify the person or entity that
holds such collateral; and
(iii) Identify the jurisdiction in which
the collateral is located, and, if different,
the jurisdiction in which the security
interest in the collateral is enforceable
against the covered company;
(5) Describe any material off-balance
sheet exposures (including guarantees
and contractual obligations) of the
covered company and its material
entities, including a mapping to its
identified critical operations and core
business lines;
(6) Describe the practices of the
covered company, its material entities
and its core business lines related to the
booking of trading and derivatives
activities;
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(7) Identify material hedges of the
covered company, its material entities,
and its core business lines related to
trading and derivative activities,
including a mapping to legal entity;
(8) Describe the hedging strategies of
the covered company;
(9) Describe the process undertaken
by the covered company to establish
exposure limits;
(10) Identify the major counterparties
of the covered company and describe
the interconnections, interdependencies
and relationships with such major
counterparties;
(11) Analyze whether the failure of
each major counterparty would likely
have an adverse impact on or result in
the material financial distress or failure
of the covered company; and
(12) Identify each trading, payment,
clearing, or settlement system of which
the covered company, directly or
indirectly, is a member and on which
the covered company conducts a
material number or value amount of
trades or transactions. Map membership
in each such system to the covered
company’s material entities, identified
critical operations and core business
lines.
(f) Management information systems.
(1) Each full resolution plan shall
include:
(i) A detailed inventory and
description of the key management
information systems and applications,
including systems and applications for
risk management, accounting, and
financial and regulatory reporting, used
by the covered company and its material
entities. The description of each system
or application provided shall identify
the legal owner or licensor, the use or
function of the system or application,
service level agreements related thereto,
any software and system licenses, and
any intellectual property associated
therewith;
(ii) A mapping of the key management
information systems and applications to
the material entities, identified critical
operations and core business lines of the
covered company that use or rely on
such systems and applications;
(iii) An identification of the scope,
content, and frequency of the key
internal reports that senior management
of the covered company, its material
entities, identified critical operations
and core business lines use to monitor
the financial health, risks, and operation
of the covered company, its material
entities, identified critical operations
and core business lines;
(iv) A description of the process for
the appropriate supervisory or
regulatory agencies to access the
management information systems and
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applications identified in paragraph (f)
of this section; and
(v) A description and analysis of:
(A) The capabilities of the covered
company’s management information
systems to collect, maintain, and report,
in a timely manner to management of
the covered company, and to the Board,
the information and data underlying the
resolution plan; and
(B) Any gaps or weaknesses in such
capabilities, and a description of the
actions the covered company intends to
take to promptly address such gaps, or
weaknesses, and the time frame for
implementing such actions.
(2) The Board will use its examination
authority to review the demonstrated
capabilities of each covered company to
satisfy the requirements of paragraph
(f)(1)(v) of this section. The Board will
share with the Corporation information
regarding the capabilities of the covered
company to collect, maintain, and
report in a timely manner information
and data underlying the resolution plan.
(g) Interconnections and
interdependencies. To the extent not
provided elsewhere in this part, each
full resolution plan shall identify and
map to the material entities the
interconnections and interdependencies
among the covered company and its
material entities, and among the
identified critical operations and core
business lines of the covered company
that, if disrupted, would materially
affect the funding or operations of the
covered company, its material entities,
or its identified critical operations or
core business lines. Such
interconnections and interdependencies
may include:
(1) Common or shared personnel,
facilities, or systems (including
information technology platforms,
management information systems, risk
management systems, and accounting
and recordkeeping systems);
(2) Capital, funding, or liquidity
arrangements;
(3) Existing or contingent credit
exposures;
(4) Cross-guarantee arrangements,
cross-collateral arrangements, crossdefault provisions, and cross-affiliate
netting agreements;
(5) Risk transfers; and
(6) Service level agreements.
(h) Supervisory and regulatory
information. Each full resolution plan
shall:
(1) Identify any:
(i) Federal, state, or foreign agency or
authority (other than a Federal banking
agency) with supervisory authority or
responsibility for ensuring the safety
and soundness of the covered company,
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its material entities, identified critical
operations and core business lines; and
(ii) Other Federal, state, or foreign
agency or authority (other than a
Federal banking agency) with significant
supervisory or regulatory authority over
the covered company, and its material
entities and identified critical
operations and core business lines.
(2) Identify any foreign agency or
authority responsible for resolving a
foreign-based material entity and
identified critical operations or core
business lines of the covered company;
and
(3) Include contact information for
each agency identified in paragraphs
(h)(1) and (2) of this section.
§ ll.6 Informational content of a
targeted resolution plan.
(a) In general. A targeted resolution
plan is a subset of a full resolution plan
and shall include core elements of a full
resolution plan and information
concerning key areas of focus as set
forth in this section.
(b) Targeted resolution plan content.
Each targeted resolution plan of a
covered company shall include:
(1) The core elements;
(2) Such targeted information as the
Board and Corporation may jointly
identify pursuant to paragraph (c) of this
section;
(3) A description of each material
change experienced by the covered
company since the filing of the covered
company’s previously submitted
resolution plan (or affirmation that no
such material change has occurred); and
(4) A description of changes to the
covered company’s previously
submitted resolution plan resulting from
any;
(i) Change in law or regulation;
(ii) Guidance or feedback from the
Board and the Corporation; or
(iii) Material change described
pursuant to paragraph (b)(3) of this
section.
(c) Targeted information requests. No
less than 12 months before the date by
which a covered company is required to
submit a targeted resolution plan, the
Board and Corporation may jointly
identify in writing resolution-related
key areas of focus, questions, and issues
that must also be addressed in the
covered company’s targeted resolution
plan.
(d) Deemed incorporation by
reference. If a covered company does
not include in its targeted resolution
plan a description of changes to any
information set forth in section
165(d)(1)(A), (B), or (C) of the DoddFrank Act (12 U.S.C. 5365(d)(1)(A), (B),
or (C)) since its previously submitted
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59225
resolution plan, such information from
its previously submitted resolution plan
are incorporated by reference into its
targeted resolution plan.
§ ll.7 Informational content of a reduced
resolution plan.
(a) Reduced resolution plan content.
Each reduced resolution plan of a
covered company shall include:
(1) A description of each material
change experienced by the covered
company since the filing of the covered
company’s previously submitted
resolution plan (or affirmation that no
such material change has occurred); and
(2) A description of changes to the
strategic analysis that was presented in
the covered company’s previously
submitted resolution plan resulting from
any:
(i) Change in law or regulation;
(ii) Guidance or feedback from the
Board and the Corporation; or
(iii) Material change described
pursuant to paragraph (a)(1) of this
section.
(b) Deemed incorporation by
reference. If a covered company does
not include in its reduced resolution
plan a description of changes to any
information set forth in section
165(d)(1)(A), (B), or (C) of the DoddFrank Act (12 U.S.C. 5365(d)(1)(A), (B),
or (C)) since its previously submitted
resolution plan, such information from
its previously submitted resolution plan
are incorporated by reference into its
reduced resolution plan.
§ ll.8 Review of resolution plans;
resubmission of deficient resolution plans.
(a) Review of resolution plans. The
Board and Corporation will seek to
coordinate their activities concerning
the review of resolution plans,
including planning for, reviewing, and
assessing the resolution plans, as well as
such activities that occur during the
periods between resolution plan
submissions.
(b) Joint determination regarding
deficient resolution plans. If the Board
and Corporation jointly determine that
the resolution plan of a covered
company submitted under § ll.4 is
not credible or would not facilitate an
orderly resolution of the covered
company under the Bankruptcy Code,
the Board and Corporation shall jointly
notify the covered company in writing
of such determination. Any joint notice
provided under this paragraph (b) shall
be provided pursuant to paragraph (f) of
this section and shall identify the
deficiencies identified by the Board and
Corporation in the resolution plan. A
deficiency is an aspect of a covered
company’s resolution plan that the
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Board and Corporation jointly
determine presents a weakness that
individually or in conjunction with
other aspects could undermine the
feasibility of the covered company’s
resolution plan.
(c) Resubmission of a resolution plan.
Within 90 days of receiving a notice of
deficiencies issued pursuant to
paragraph (b) of this section, or such
shorter or longer period as the Board
and Corporation may jointly determine,
a covered company shall submit a
revised resolution plan to the Board and
Corporation that addresses the
deficiencies jointly identified by the
Board and Corporation, and that
discusses in detail:
(1) The revisions made by the covered
company to address the deficiencies
jointly identified by the Board and the
Corporation;
(2) Any changes to the covered
company’s business operations and
corporate structure that the covered
company proposes to undertake to
facilitate implementation of the revised
resolution plan (including a timeline for
the execution of such planned changes);
and
(3) Why the covered company
believes that the revised resolution plan
is credible and would result in an
orderly resolution of the covered
company under the Bankruptcy Code.
(d) Extensions of time. Upon their
own initiative or a written request by a
covered company, the Board and
Corporation may jointly extend any time
period under this section. Each
extension request shall be supported by
a written statement of the covered
company describing the basis and
justification for the request.
(e) Joint determination regarding
shortcomings in resolution plans. The
Board and Corporation may also jointly
identify one or more shortcomings in a
covered company’s resolution plan. A
shortcoming is a weakness or gap that
raises questions about the feasibility of
a covered company’s resolution plan,
but does not rise to the level of a
deficiency for both the Board and
Corporation. If a shortcoming is not
satisfactorily explained or addressed
before or in the submission of the
covered company’s next resolution plan,
it may be found to be a deficiency in the
covered company’s next resolution plan.
The Board and the Corporation may
identify an aspect of a covered
company’s resolution plan as a
deficiency even if such aspect was not
identified as a shortcoming in an earlier
resolution plan submission.
(f) Feedback. Following their review
of a resolution plan, the Board and the
Corporation will jointly send a
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notification to each covered company
that identifies any deficiencies or
shortcomings in the covered company’s
resolution plan (or confirms that no
deficiencies or shortcomings were
identified) and provides any feedback
on the resolution plan. The Board and
the Corporation will jointly send the
notification no later than 12 months
after the later of the date on which the
covered company submitted the
resolution plan and the date by which
the covered company was required to
submit the resolution plan, unless the
Board and the Corporation jointly
determine in their discretion that
extenuating circumstances exist that
require delay.
§ ll.9 Failure to cure deficiencies on
resubmission of a resolution plan.
(a) In general. The Board and
Corporation may jointly determine that
a covered company or any subsidiary of
a covered company shall be subject to
more stringent capital, leverage, or
liquidity requirements, or restrictions
on the growth, activities, or operations
of the covered company or the
subsidiary if:
(1) The covered company fails to
submit a revised resolution plan under
§ ll.8(c) within the required time
period; or
(2) The Board and the Corporation
jointly determine that a revised
resolution plan submitted under
§ ll.8(c) does not adequately remedy
the deficiencies jointly identified by the
Board and the Corporation under
§ ll.8(b).
(b) Duration of requirements or
restrictions. Any requirements or
restrictions imposed on a covered
company or a subsidiary thereof
pursuant to paragraph (a) of this section
shall cease to apply to the covered
company or subsidiary, respectively, on
the date that the Board and the
Corporation jointly determine the
covered company has submitted a
revised resolution plan that adequately
remedies the deficiencies jointly
identified by the Board and the
Corporation under § ll.8(b).
(c) Divestiture. The Board and
Corporation, in consultation with the
Council, may jointly, by order, direct
the covered company to divest such
assets or operations as are jointly
identified by the Board and Corporation
if:
(1) The Board and Corporation have
jointly determined that the covered
company or a subsidiary thereof shall be
subject to requirements or restrictions
pursuant to paragraph (a) of this section;
and
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(2) The covered company has failed,
within the 2-year period beginning on
the date on which the determination to
impose such requirements or
restrictions under paragraph (a) of this
section was made, to submit a revised
resolution plan that adequately
remedies the deficiencies jointly
identified by the Board and the
Corporation under § ll.8(b); and
(3) The Board and Corporation jointly
determine that the divestiture of such
assets or operations is necessary to
facilitate an orderly resolution of the
covered company under the Bankruptcy
Code in the event the company was to
fail.
§ ll.10
Consultation.
Before issuing any notice of
deficiencies under § ll.8(b),
determining to impose requirements or
restrictions under § ll.9(a), or issuing
a divestiture order pursuant to
§ ll.9(c) with respect to a covered
company that is likely to have a
significant impact on a functionally
regulated subsidiary or a depository
institution subsidiary of the covered
company, the Board—
(a) Shall consult with each Council
member that primarily supervises any
such subsidiary; and
(b) May consult with any other
Federal, state, or foreign supervisor as
the Board considers appropriate.
§ ll.11 No limiting effect or private right
of action; confidentiality of resolution
plans.
(a) No limiting effect on bankruptcy or
other resolution proceedings. A
resolution plan submitted pursuant to
this part shall not have any binding
effect on:
(1) A court or trustee in a proceeding
commenced under the Bankruptcy
Code;
(2) A receiver appointed under title II
of the Dodd-Frank Act (12 U.S.C. 5381
et seq.);
(3) A bridge financial company
chartered pursuant to 12 U.S.C. 5390(h);
or
(4) Any other authority that is
authorized or required to resolve a
covered company (including any
subsidiary or affiliate thereof) under any
other provision of Federal, state, or
foreign law.
(b) No private right of action. Nothing
in this part creates or is intended to
create a private right of action based on
a resolution plan prepared or submitted
under this part or based on any action
taken by the Board or the Corporation
with respect to any resolution plan
submitted under this part.
(c) Form of resolution plans—(1)
Generally. Each full, targeted, and
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reduced resolution plan of a covered
company shall be divided into a public
section and a confidential section. Each
covered company shall segregate and
separately identify the public section
from the confidential section.
(2) Public section of full and targeted
resolution plans. The public section of
a full or targeted resolution plan shall
consist of an executive summary of the
resolution plan that describes the
business of the covered company and
includes, to the extent material to an
understanding of the covered company:
(i) The names of material entities;
(ii) A description of core business
lines;
(iii) Consolidated or segment financial
information regarding assets, liabilities,
capital and major funding sources;
(iv) A description of derivative
activities and hedging activities;
(v) A list of memberships in material
payment, clearing and settlement
systems;
(vi) A description of foreign
operations;
(vii) The identities of material
supervisory authorities;
(viii) The identities of the principal
officers;
(ix) A description of the corporate
governance structure and processes
related to resolution planning;
(x) A description of material
management information systems; and
(xi) A description, at a high level, of
the covered company’s resolution
strategy, covering such items as the
range of potential purchasers of the
covered company, its material entities,
and its core business lines.
(3) Public section of reduced
resolution plans. The public section of
a reduced resolution plan shall consist
of an executive summary of the
resolution plan that describes the
business of the covered company and
includes, to the extent material to an
understanding of the covered company:
(i) The names of material entities;
(ii) A description of core business
lines;
(iii) The identities of the principal
officers; and
(iv) A description, at a high level, of
the covered company’s resolution
strategy, referencing the applicable
resolution regimes for its material
entities.
(d) Confidential treatment of
resolution plans. (1) The confidentiality
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of resolution plans and related materials
shall be determined in accordance with
applicable exemptions under the
Freedom of Information Act (5 U.S.C.
552(b)), 12 CFR part 261 (the Board’s
Rules Regarding Availability of
Information), and 12 CFR part 309 (the
Corporation’s Disclosure of Information
rules).
(2) Any covered company submitting
a resolution plan or related materials
pursuant to this part that desires
confidential treatment of the
information under 5 U.S.C. 552(b)(4), 12
CFR part 261 (the Board’s Rules
Regarding Availability of Information),
and 12 CFR part 309 (the Corporation’s
Disclosure of Information rules) may file
a request for confidential treatment in
accordance with those rules.
(3) To the extent permitted by law,
information comprising the Confidential
Section of a resolution plan will be
treated as confidential.
(4) To the extent permitted by law, the
submission of any nonpublic data or
information under this part shall not
constitute a waiver of, or otherwise
affect, any privilege arising under
Federal or state law (including the rules
of any Federal or state court) to which
the data or information is otherwise
subject. Privileges that apply to
resolution plans and related materials
are protected pursuant to section 18(x)
of the Federal Deposit Insurance Act (12
U.S.C. 1828(x)).
§ ll.12
Enforcement.
The Board and Corporation may
jointly enforce an order jointly issued by
the Board and Corporation under
§ ll.9(a) or (c). The Board, in
consultation with the Corporation, may
take any action to address any violation
of this part by a covered company under
section 8 of the Federal Deposit
Insurance Act (12 U.S.C. 1818).
[END OF COMMON TEXT]
List of Subjects
12 CFR Part 243
Administrative practice and
procedure, Banks, Banking, Holding
companies, Reporting and
recordkeeping requirements, Securities.
12 CFR Part 381
Administrative practice and
procedure, Banks, Banking, Holding
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59227
companies, Reporting and
recordkeeping requirements, Resolution
plans.
Adoption of the Common Rule Text
The adoption of the common rules by
the agencies, as modified by agencyspecific text, is set forth below:
BOARD OF GOVERNORS OF THE
FEDERAL RESERVE SYSTEM
12 CFR Chapter II
Authority and Issuance
For the reasons set forth in the
preamble, the Board of Governors of the
Federal Reserve System revises part 243
to 12 CFR chapter II as set forth in the
text of the common rule at the end of
the preamble and further amends 12
CFR part 243 as follows:
PART 243—RESOLUTION PLANS
(REGULATION QQ)
1. The authority citation for part 243
continues to read as follows:
■
Authority: 12 U.S.C. 5365.
2. The heading of part 243 is revised
to read as set forth above.
■
3. In § 243.1, amend paragraph (a) by
adding a sentence at the end to read as
follows:
■
§ 243.1
Authority and scope.
(a) * * * The Board is also issuing
this part pursuant to section 165(a)(2)(C)
of the Dodd-Frank Act.
*
*
*
*
*
■
4. Add § 243.13 to read as follows:
§ 243.13
Additional covered companies.
An additional covered company is
any bank holding company or any
foreign bank or company that is a bank
holding company or is treated as a bank
holding company under section 8(a) of
the International Banking Act of 1978
(12 U.S.C. 3106(a)) that is:
(a) Identified as a category II banking
organization pursuant to § 252.5 of this
title;
(b) Identified as a category III banking
organization pursuant to § 252.5 of this
title; or
(c) Made subject to this part by order
of the Board.
E:\FR\FM\01NOR4.SGM
01NOR4
59228
Federal Register / Vol. 84, No. 212 / Friday, November 1, 2019 / Rules and Regulations
FEDERAL DEPOSIT INSURANCE
CORPORATION
PART 381—RESOLUTION PLANS
12 CFR Chapter III
■
5. The authority citation for part 381
continues to read as follows:
Authority and Issuance
Authority: 12 U.S.C.5365(d).
For the reasons set forth in the
preamble, the Federal Deposit Insurance
Corporation revises part 381 to 12 CFR
chapter III as set forth in the text of the
common rule at the end of the preamble
and further amends 12 part 381 as
follows:
VerDate Sep<11>2014
22:13 Oct 31, 2019
Jkt 250001
§ 381.2
[Amended]
6. In § 381.2, in paragraph (1)(v) of the
definition of ‘‘covered company’’, add
the words ‘‘of this title’’ after the phrase
‘‘pursuant to § 243.13’’.
■
PO 00000
Frm 00036
Fmt 4701
Sfmt 9990
By order of the Board of Governors of the
Federal Reserve System, October 23, 2019.
Margaret McCloskey Shanks,
Deputy Secretary of the Board.
Federal Deposit Insurance Corporation.
By order of the Board of Directors.
Dated at Washington, DC, on October 15,
2019.
Annmarie H. Boyd,
Assistant Executive Secretary.
[FR Doc. 2019–23967 Filed 10–31–19; 8:45 am]
BILLING CODE 6210–01–P 6714–01–P
E:\FR\FM\01NOR4.SGM
01NOR4
]]>Agencies
[Federal Register Volume 84, Number 212 (Friday, November 1, 2019)]
[Rules and Regulations]
[Pages 59194-59228]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-23967]
[[Page 59193]]
Vol. 84
Friday,
No. 212
November 1, 2019
Part VI
Federal Reserve System
Federal Deposit Insurance Corporation
-----------------------------------------------------------------------
12 CFR Parts 243 and 381
Resolution Plans Required; Final Rule
Federal Register / Vol. 84 , No. 212 / Friday, November 1, 2019 /
Rules and Regulations
[[Page 59194]]
-----------------------------------------------------------------------
FEDERAL RESERVE SYSTEM
12 CFR Part 243
[Regulation QQ; Docket No. R-1660]
RIN 7100-AF47
FEDERAL DEPOSIT INSURANCE CORPORATION
12 CFR Part 381
RIN 3064-AE93
Resolution Plans Required
AGENCY: Board of Governors of the Federal Reserve System (Board) and
Federal Deposit Insurance Corporation (Corporation).
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: The Board and the Corporation (together, the agencies) are
jointly adopting this final rule implementing the resolution planning
requirements of section 165(d) of the Dodd-Frank Wall Street Reform and
Consumer Protection Act (the Dodd-Frank Act). This final rule is
intended to reflect improvements identified since the agencies
finalized their joint resolution plan rule in November 2011 (2011 rule)
and to address amendments to the Dodd-Frank Act made by the Economic
Growth, Regulatory Relief, and Consumer Protection Act (EGRRCPA).
Through this final rule, the Board is also establishing risk-based
categories for determining the application of the resolution planning
requirement to certain U.S. and foreign banking organizations,
consistent with section 401 of EGRRCPA. The final rule also extends the
default resolution plan filing cycle, allows for more focused
resolution plan submissions, and improves certain aspects of the
resolution planning rule.
DATES: This rule is effective December 31, 2019.
FOR FURTHER INFORMATION CONTACT:
Board: Mona Elliot, Deputy Associate Director, (202) 912-4688,
Catherine Tilford, Assistant Director, (202) 452-5240, Kathryn
Ballintine, Lead Financial Institution Policy Analyst, (202) 452-2555,
or Tudor Rus, Lead Financial Institution Policy Analyst, (202) 475-
6359, Division of Supervision and Regulation; or Laurie Schaffer,
Associate General Counsel, (202) 452-2272, Jay Schwarz, Special
Counsel, (202) 452-2970, Steve Bowne, Senior Counsel, (202) 452-3900,
or Sarah Podrygula, Attorney, (202) 912-4658, Legal Division, Board of
Governors of the Federal Reserve System, 20th and C Streets NW,
Washington, DC 20551. For users of Telecommunications Device for the
Deaf (TDD), (202) 263-4869.
Corporation: Lori J. Quigley, Deputy Director, Institutions
Monitoring Group, [email protected]; Robert C. Connors, Associate
Director, Large Bank Supervision Branch, [email protected]; and
Alexandra Steinberg Barrage, Associate Director, Resolution Strategy
and Policy, Division of Complex Institution Supervision & Resolution,
[email protected]; or David N. Wall, Assistant General Counsel,
[email protected]; Celia Van Gorder, Supervisory Counsel,
[email protected]; Dena S. Kessler, Counsel, [email protected]; or
Ryan M. Rappa, Counsel, [email protected], Legal Division, Federal
Deposit Insurance Corporation, 550 17th Street NW, Washington, DC
20429.
SUPPLEMENTARY INFORMATION:
I. Introduction
A. Background
B. Overview of the Proposed Rule
II. Overview of Comments
III. Final Rule
A. Identification of Firms Subject to the Resolution Planning
Requirement and Filing Groups
1. Firms Subject to the Resolution Planning Requirement
2. Filing Groups and Filing Cycle
B. Resolution Plan Content
1. General Guidance and Firm-Specific Feedback
2. Material Changes and Extraordinary Events
3. Full Resolution Plans
4. Waivers of Informational Content Requirements
5. Targeted Resolution Plans
6. Reduced Resolution Plans
7. Tailored Resolution Plans
C. Critical Operations Methodology and Reconsideration Process
1. Identification by Covered Companies and Methodology
Requirement
2. Identification by Agencies and Requests for Reconsideration
D. Clarifications to the 2011 Rule
1. Resolution Strategy for Foreign-Based Covered Companies
2. Covered Companies in Multi-Tier Foreign Banking Organization
Holding Companies
3. Removal of the Incompleteness Concept and Related Review
4. Assessment of New Covered Companies
5. Timing of New Filings, Firms That Change Filing Categories
6. Clarification of the Mapping Expectations for Foreign Banking
Organizations
7. Standard of Review
8. Deletion of ``Deficiencies'' Relating to Management
Information Systems
9. Incorporation by Reference
E. Technical and Conforming Changes From the Proposal
F. Board Delegation of Authority
IV. Effective Date and Transition Period
V. Impact Analysis
VI. Regulatory Analysis
A. Paperwork Reduction Act
B. Regulatory Flexibility Act
C. Riegle Community Development and Regulatory Improvement Act
of 1994
D. Plain Language
E. The Congressional Review Act
I. Introduction
A. Background
Section 165(d) of the Dodd-Frank Act \1\ and the 2011 rule \2\
require certain financial companies (covered companies) to report
periodically to the agencies their plans for rapid and orderly
resolution under the U.S. Bankruptcy Code (the Bankruptcy Code) in the
event of material financial distress or failure. The goal of the Dodd-
Frank Act resolution planning process is to help ensure that a covered
company's failure would not have serious adverse effects on financial
stability in the United States. The Dodd-Frank Act and the 2011 rule
require a covered company to submit a resolution plan for review by the
agencies. The resolution planning process requires covered companies to
demonstrate that they have adequately assessed the challenges that
their structures and business activities pose to a rapid and orderly
resolution in the event of material financial distress or failure and
that they have taken action to address those challenges, including
through the development of capabilities appropriate to the covered
company's size and complexity.
---------------------------------------------------------------------------
\1\ 12 U.S.C. 5365(d).
\2\ 76 FR 67323 (November 1, 2011).
---------------------------------------------------------------------------
Implementation of the 2011 rule has been an iterative process aimed
at strengthening the resolvability and resolution planning capabilities
of covered companies. Since finalization of the 2011 rule, the agencies
have reviewed multiple resolution plan submissions and have provided
feedback on individual resolution plans following their review by the
agencies (firm-specific feedback) and guidance directed to groups of
firms (general guidance) to assist covered companies in their
development of subsequent resolution plan submissions.
EGRRCPA revised the resolution planning requirement as part of the
changes the law made to application of the enhanced prudential
standards in section 165 of the Dodd-Frank Act. Specifically, EGRRCPA
raised the $50 billion minimum asset threshold for general application
of the resolution planning requirement to $250 billion in total
consolidated assets, and provided the Board with discretion to apply
the resolution planning requirement to firms with $100 billion or more
and less than $250 billion in total consolidated
[[Page 59195]]
assets.\3\ The threshold increase occurs in two stages. Immediately on
the date of EGRRCPA's enactment, firms with total consolidated assets
of less than $100 billion (for foreign banking organizations, $100
billion in total global assets) were no longer subject to the
resolution planning requirement. Eighteen months after the date of
EGRRCPA's enactment, the threshold increases to $250 billion in total
consolidated assets. However, EGRRCPA provides the Board with the
authority to apply resolution planning requirements to firms with $100
billion or more and less than $250 billion in total consolidated
assets. Specifically, under section 165(a)(2)(C) of the Dodd-Frank Act,
as revised by EGRRCPA, the Board may, by order or rule, apply the
resolution planning requirement to any firm or firms with total
consolidated assets of $100 billion (for foreign banking organizations,
$100 billion in total global assets) or more.\4\
---------------------------------------------------------------------------
\3\ EGRRCPA also provides that any bank holding company,
regardless of asset size, that has been identified as a U.S. global
systemically important bank (U.S. GSIB) under the Board's U.S. GSIB
surcharge rule shall be considered a bank holding company with $250
billion or more in total consolidated assets for purposes of the
application of the resolution planning requirement. EGRRCPA section
401(f), Public Law 115 174, 132 Stat. 1296.
\4\ 12 U.S.C. 5365(a); EGRRCPA section 401(a)(1)(B)(iii) (to be
codified at 12 U.S.C. 5365(a)(2)(C)). See also EGRRCPA section
401(g).
---------------------------------------------------------------------------
In May 2019, the agencies invited comment on a proposal to amend
and restate the 2011 rule (the proposed rule or proposal).\5\ The
proposed rule was intended to address amendments to the Dodd-Frank Act
made by the EGRRCPA and improve certain aspects of the 2011 rule based
on the agencies' experience implementing the 2011 rule since its
adoption. The agencies are now finalizing the proposed rule, with
certain changes based on public comments on the proposed rule, as
described in detail below.
---------------------------------------------------------------------------
\5\ 84 FR 21600 (May 14, 2019).
---------------------------------------------------------------------------
The Board's Tailoring Rules
Consistent with section 401 of EGRRCPA, the Board finalized two
separate proposals to revise the framework for determining the
prudential standards that should apply to large U.S. banking
organizations (domestic tailoring rule) \6\ and to large foreign
banking organizations (FBO tailoring rule \7\ and together with the
domestic tailoring rule, the tailoring rules). Among other provisions,
the tailoring rules identify distinct standards applicable to firms for
the purpose of calibrating requirements. The tailoring categories
established in the tailoring rules are as follows:
---------------------------------------------------------------------------
\6\ Prudential Standards for Large Bank Holding Companies and
Savings and Loan Holding Companies, 83 FR 61408 (November 29, 2018).
The Board's final rule is published elsewhere in this issue of the
Federal Register and is also available on the Board's website at
https://www.federalreserve.gov/aboutthefed/boardmeetings/files/tailoring-rule-fr-notice-20191010a2.pdf.
\7\ Prudential Standards for Large Foreign Banking
Organizations; Revisions to Proposed Prudential Standards for Large
Domestic Bank Holding Companies and Savings and Loan Holding
Companies, 84 FR 21988 (May 15, 2019). The Board's final rule is
published elsewhere in this issue of the Federal Register and is
also available on the Board's website at https://www.federalreserve.gov/aboutthefed/boardmeetings/files/tailoring-rule-fr-notice-20191010a2.pdf.
---------------------------------------------------------------------------
Category I standards will apply to:
[cir] Global systemically important bank holding companies (U.S.
GSIBs),
Category II standards will apply to:
[cir] U.S. firms that are not subject to Category I standards with
(a) $700 billion or more in average total consolidated assets, or (b)
$100 billion or more in average total consolidated assets that have $75
billion or more in average cross-jurisdictional activity, and
[cir] Foreign banking organizations with (a) $700 billion or more
in average combined U.S. assets,\8\ or (b) $100 billion or more in
average combined U.S. assets that have $75 billion or more in average
cross-jurisdictional activity measured based on the foreign banking
organization's combined U.S. operations.\9\
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\8\ Combined U.S. assets means the sum of the consolidated
assets of each top-tier U.S. subsidiary of the foreign banking
organization (excluding any section 2(h)(2) company as defined in
section 2(h)(2) of the Bank Holding Company Act (12 U.S.C.
1841(h)(2)), if applicable) and the total assets of each U.S. branch
and U.S. agency of the foreign banking organization, as reported by
the foreign banking organization on the FR Y-7Q.
\9\ The combined U.S. operations of a foreign banking
organization include any U.S. subsidiaries (including any U.S.
intermediate holding company), U.S. branches, and U.S. agencies. In
addition, for a foreign banking organization that is not required to
form a U.S. intermediate holding company, combined U.S. operations
refer to its U.S. branch and agency network and the U.S.
subsidiaries of the foreign banking organization (excluding any
section 2(h)(2) company as defined in section 2(h)(2) of the Bank
Holding Company Act (12 U.S.C. 1841(h)(2), if applicable) and any
subsidiaries of such U.S. subsidiaries.
---------------------------------------------------------------------------
Category III standards will apply to:
[cir] U.S. firms that are not subject to Category I or Category II
standards with (a) $250 billion or more in average total consolidated
assets, or (b) $100 billion or more in average total consolidated
assets that have $75 billion or more in any of the following risk-based
indicators: Average total nonbank assets, average weighted short-term
wholesale funding, or average off-balance sheet exposure, and
[cir] Foreign banking organizations that are not subject to
Category II standards with (a) $250 billion or more in average combined
U.S. assets, or (b) $100 billion or more in average combined U.S.
assets that have $75 billion or more in any of the following risk-based
indicators measured based on the combined U.S. operations: Average
total nonbank assets, average weighted short-term wholesale funding, or
average off-balance sheet exposure and
Category IV standards will apply to:
[cir] U.S. firms with $100 billion or more in average total
consolidated assets that do not meet any of the thresholds specified
for Categories I through III, and
[cir] Foreign banking organizations with $100 billion or more in
average combined U.S. assets that do not meet any of the thresholds
specified for Categories II or III.
These categories form the basis for the final rule's framework for
imposing resolution planning requirements, with adjustments where
appropriate. The categories are also used to tailor the content of the
resolution planning requirements, taking into account covered
companies' particular geographic footprints, operations, and
activities, as described below.
B. Overview of the Proposed Rule
Under the proposed rule, resolution planning requirements would
have applied to (1) those firms that are statutorily required to submit
resolution plans (i.e., U.S. and foreign banking organizations with
$250 billion or more in total consolidated assets, the U.S. GSIBs, and
any non-bank financial company designated by the Financial Stability
Oversight Council (Council) for supervision by the Board) and (2) firms
with total consolidated assets of $100 billion or more and less than
$250 billion that would have been subject to Category II or III
standards under the notices of proposed rulemaking for the tailoring
rules. In particular, the Board would have applied resolution planning
requirements to firms with total consolidated assets of $100 billion or
more and less than $250 billion that would have had $75 billion or more
in any of the following four risk-based indicators: Cross-
jurisdictional activity, nonbank assets, weighted short-term wholesale
funding, or off-balance-sheet exposure. In the case of a foreign
banking organization, resolution planning requirements would only have
applied if the firm also had combined U.S. assets equal to $100 billion
or more, and the risk-based indicators would have been measured based
on the firm's combined U.S. operations.
The proposed rule would have divided firms subject to resolution
[[Page 59196]]
planning requirements into three categories for purposes of determining
submission frequency and resolution plan content requirements. The U.S.
GSIBs would have been required to submit a resolution plan every two
years, alternating between full and targeted resolution plans. Firms
subject to Category II or III standards under the notices of proposed
rulemaking for the tailoring rules would have been required to submit a
resolution plan every three years, alternating between full and
targeted resolution plans. Other foreign banking organizations subject
to the proposed rule but not subject to Category II or III standards
would have been required to submit a resolution plan every three years,
with their initial filing being a full resolution plan and each
subsequent submission being a reduced resolution plan. The proposal
would have generally maintained the same informational content
requirements for full resolution plans as under the 2011 rule, but
would have established a new process whereby covered companies could
request a waiver from certain informational content requirements in
their full resolution plans. Under the proposal, covered companies
would have been required to include in targeted resolution plans and
reduced resolution plans information about certain changes since their
previous resolution plan submission. Targeted resolution plans would
also have included information about certain resolution planning core
elements and information responsive to the agencies' targeted
information requests.
The proposed rule would also have made certain procedural changes
to the provisions of the 2011 rule relating to the identification of
critical operations. The proposal would have established formal
processes for firms and the agencies to identify particular operations
of covered companies as critical operations and to rescind prior
critical operations identifications made by the agencies. In addition,
the proposal would have specified a process for a covered company to
request reconsideration of operations previously identified by the
agencies as critical operations, and required that a covered company
notify the agencies if it ceased to identify an operation as a critical
operation.
II. Overview of Comments
The agencies received and reviewed 14 comment letters on the
proposed rule. Commenters included various financial services trade
associations, covered companies, public interest groups, and
individuals. In addition, the agencies met with industry
representatives at their request to discuss issues relating to the
proposed rule. This section provides an overview of the general themes
raised by commenters. Comments are addressed in further detail in the
below sections describing the final rule, including any changes that
the agencies have made to the proposed rule in response to comments.
General Support and Opposition
A number of commenters generally supported the proposed rule. These
commenters supported the proposed rule's efforts to tailor resolution
planning requirements to a firm's size, complexity, and risk profile,
and asserted that the proposed rule would preserve and improve upon key
elements of resolution planning while enhancing transparency and
meaningfully reducing burden.\10\
---------------------------------------------------------------------------
\10\ Certain commenters also made assertions that characterized
the agencies' views of prior resolution plan submissions under the
2011 rule or the agencies' rationale for proposing certain changes
to the 2011 rule. The agencies are not responding to or endorsing
these assertions in this preamble. The agencies' views regarding
individual resolution plans are communicated to covered companies
following the agencies' review of those resolution plans.
Separately, certain commenters proposed strengthening regulatory
requirements that are unrelated to the resolution planning rule.
These comments are outside the scope of this rulemaking.
---------------------------------------------------------------------------
Several commenters raised concerns about the proposed rule. These
commenters generally asserted that the proposed rule would
inappropriately weaken financial regulations put in place after the
2008 financial crisis and thereby increase systemic risk. In addition,
certain commenters asserted that the proposed rule inappropriately
relied on burden reduction as a rationale for the proposed changes, was
inconsistent with administrative law because the agencies did not
provide sufficient justification for reducing the frequency and content
of resolution plans, and was inconsistent with the Dodd-Frank Act. One
commenter questioned whether firms would reallocate resources no longer
needed to comply with the current rule to activities considered to be
more beneficial, and whether any such benefit would accrue to the
public at large. One commenter also asserted that the agencies should
delay modifying the 2011 rule until it has been tested in an economic
downturn, and another commenter asserted that the agencies should be
cognizant of the effect of regulations on non-financial companies and
small business lending. As further explained below, the final rule
would continue to apply appropriate requirements on firms based on the
relative risk that a firm's failure would pose to U.S. financial
stability, and would preserve and improve upon key elements of the
resolution planning framework that were put in place after the 2008
financial crisis. The agencies believe that this approach is consistent
with the Dodd-Frank Act, as amended by the EGRRCPA, which generally
provides for the tailoring of enhanced prudential standards based on
firms' capital structure, riskiness, complexity, financial activities
(including financial activities of subsidiaries), size, and other risk-
related factors. Moreover, since the finalization of the 2011 rule, the
agencies have reviewed multiple resolution plan submissions and have
provided firm-specific feedback and general guidance to assist the
covered companies in their development of subsequent resolution plan
submissions. Consequently, covered companies' submissions and the
agencies' firm-specific feedback and general guidance have matured over
several resolution plan cycles, and the agencies believe this is an
appropriate time to revise the 2011 rule to reflect improvements
identified since it was originally adopted, including changes in the
frequency and content of resolution plans, for the reasons stated in
the proposal and this preamble.\11\
---------------------------------------------------------------------------
\11\ With respect to the timing of these changes, the agencies
also note that, due to the effective date of section 401 of the
EGRRCPA, the agencies believe it is important to complete revisions
to the rule prior to the date that, pursuant to EGRRCPA, the
resolution plan submission threshold increases to $250 billion in
total consolidated assets.
---------------------------------------------------------------------------
2019 and 2020 Plans
The agencies received several comments from covered companies and
industry representatives requesting clarification regarding resolution
plan filing requirements for 2019 and 2020. On July 26, 2019, the
agencies informed (1) covered companies with resolution plans due in
December 2019 that their next resolution plan submission dates were
extended to July 1, 2021 or such other date that may be specified when
the agencies adopt the final rule and (2) Barclays PLC, Credit Suisse,
Deutsche Bank AG, and UBS AG that the informational requirements for
their July 2020 resolution plans may be limited to changes they have
made to their 2018 resolution plans to address shortcomings identified
in those resolution plans, and they are required to submit their next
full resolution plans on July 1, 2021 or such other date that
[[Page 59197]]
may be specified when the agencies adopt the final rule.\12\
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\12\ See https://www.federalreserve.gov/newsevents/pressreleases/bcreg20190726a.htm; https://www.fdic.gov/news/news/press/2019/pr19069.html.
---------------------------------------------------------------------------
Comments Related to the Corporation's IDI Rule
The agencies received several comments asserting that the filing
cycle or resolution plan content requirements under the final rule
should align with the requirements under the Corporation's rule
requiring certain insured depository institutions to submit resolution
plans (the IDI rule).\13\ Some commenters also asserted that firms
should be able to incorporate by reference information included in a
resolution plan submitted pursuant to the IDI rule into a resolution
plan submitted pursuant to the final rule. A commenter stated that the
agencies should harmonize the informational content requirements for
resolution plans under the final rule with resolution plans under the
IDI rule for filers subject to Category III standards, and that doing
so would permit these filers to focus their resolution planning efforts
on a uniform resolution plan filing process.
---------------------------------------------------------------------------
\13\ 12 CFR 360.10.
---------------------------------------------------------------------------
The agencies have not modified the proposal on the basis of these
comments. The agencies note that the final rule and the IDI rule are
separate requirements with different purposes and goals, and that the
IDI rule is administered by only the Corporation. In part because a
resolution plan submitted pursuant to the IDI rule is submitted to only
the Corporation, incorporating by reference such information into a
resolution plan submitted pursuant to the final rule is more
challenging than incorporation by reference of such information into a
resolution plan submitted pursuant to the IDI rule. The agencies note
that the Corporation has issued an advanced notice of proposed
rulemaking regarding the IDI rule. That advanced notice of proposed
rulemaking notes, ``[t]o promote efficiency and reduce burden, the
[Corporation] is encouraging the use of incorporation by reference to
[resolution plan submissions required under section 165(d) of the Dodd-
Frank Act] where practicable.'' \14\ As the Corporation works to amend
the IDI rule, the Corporation will seek to reduce unnecessary
duplication between the IDI rule and the final rule.
---------------------------------------------------------------------------
\14\ 84 FR 16620, 16625 (April 22, 2019).
---------------------------------------------------------------------------
Firms Subject to Resolution Planning Requirements
The agencies received several comments regarding the Board's
proposed scope of application for the resolution planning requirement.
Certain commenters supported the Board's proposal to rely on the risk-
based indicators to identify those firms with $100 billion or more and
less than $250 billion in total consolidated assets that would remain
subject to resolution planning requirements under the final rule.
However, some commenters recommended changes to the manner in which the
risk-based indicators were proposed to be calculated or recommended
that the Board further narrow the scope of coverage of the resolution
planning requirement. Conversely, some commenters asserted that the
proposed scope of coverage should be expanded so that more firms would
be subject to the resolution planning requirement.
Filing Cycle
The agencies received comments in support of and opposed to the
proposed filing cycle. Some commenters asserted that a less-than-annual
requirement would allow sufficient time for covered companies to
integrate firm-specific feedback, while other commenters raised
concerns that significant changes to resolvability could occur between
less frequent resolution plan submissions. Some commenters asserted
that covered companies generally begin to prepare their resolution
plans at least one year prior to submission and recommended related
changes to the proposed filing cycle to enhance the predictability of
the timing of producing a resolution plan. For example, these
commenters asserted that the final rule should include a formal
timeline for the agencies to provide firm-specific feedback to covered
companies within one year following a resolution plan submission and
advanced notice requirements when the agencies require submission of a
full resolution plan or an interim update, or alter resolution plan
submission dates.
Informational Content
Several commenters asserted that the proposal should further tailor
informational content requirements among different categories and types
of covered companies. Some of these commenters also expressed concern
that certain covered companies within a category would have general
guidance directed to them that is not appropriate for their category.
Certain other commenters asserted that the proposed targeted resolution
plans and reduced resolution plans would contain inadequate
information. Some commenters supported the inclusion of a process by
which covered companies would be able to request waivers from certain
informational content requirements for their full resolution plans and
asserted that it would help to streamline resolution plan submissions.
However, some other commenters opposed the proposed firm-initiated
waiver request process and asserted that it was unnecessary or would be
subject to abuse by covered companies.
Critical Operations
Numerous commenters asserted that the proposed timeline for
identification and de-identification of a critical operation should be
modified to provide covered companies with additional notice of new
identifications prior to a resolution plan submission date. Some
commenters asserted that the final rule should automatically exempt
from the requirement to have a process for identifying critical
operations any covered company that does not currently have an
identified critical operation.
The comments on the proposed rule and the agencies' related
responses are discussed in further detail below.
III. Final Rule
A. Identification of Firms Subject to the Resolution Planning
Requirement and Filing Groups
1. Firms Subject to the Resolution Planning Requirement
Following EGRRCPA, three types of firms are statutorily subject to
the resolution planning requirement:
U.S. and foreign banking organizations with $250 billion
or more in total consolidated assets,
U.S. banking organizations identified as U.S. GSIBs, and
Any designated nonbank financial companies that the
Council has determined under section 113 of the Dodd-Frank Act should
be supervised by the Board.
As discussed in the proposal, following EGRRCPA, the Board has the
authority to apply the resolution planning requirement to firms with
$100 billion or more and less than $250 billion in total consolidated
assets.\15\ In the proposal, the Board proposed to apply the risk-based
indicators established in the notices of proposed rulemaking for the
tailoring rules to
[[Page 59198]]
identify those U.S. firms with total consolidated assets equal to $100
billion or more and less than $250 billion that would be subject to a
resolution planning requirement. Consistent with the notices of
proposed rulemaking for the domestic tailoring rule, the Board proposed
to apply resolution planning requirements to U.S. bank holding
companies with (a) total consolidated assets equal to $100 billion or
more and less than $250 billion and (b) $75 billion or more in any of
the following risk-based indicators: Cross-jurisdictional activity,
nonbank assets, weighted short-term wholesale funding, or off-balance
sheet exposure. Consistent with the notices of proposed rulemaking for
the FBO tailoring rule, the Board proposed to apply resolution planning
requirements to foreign banking organizations \16\ with (a) total
global assets equal to $100 billion or more and less than $250 billion,
(b) combined U.S. assets equal to $100 billion or more, and (c) $75
billion or more in any of the risk-based indicators measured based on
combined U.S. operations. In addition, the agencies proposed to use the
risk-based indicators to divide U.S. and foreign firms into groups for
the purposes of determining the frequency and informational content of
resolution plan filings.
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\15\ 12 U.S.C. 5365(a); EGRRCPA section 401(a)(1)(B)(iii) (to be
codified at 12 U.S.C. 5365(a)(2)(C)). See also EGRRCPA section
401(g).
\16\ Consistent with the 2011 rule and the proposal, for
purposes of the final rule, a foreign banking organization is a
foreign bank that has a banking presence in the United States by
virtue of operating a branch, agency, or commercial lending
subsidiary in the United States or controlling a bank in the United
States; or any company of which the foreign bank is a subsidiary.
\17\ Projected categories are based on data for Q1 2019. Actual
categories will be based on 4-quarter averages. For certain measures
for foreign banks, conservative assumptions were used to estimate
incomplete data.
\18\ Firms subject to Category I standards will be the U.S.
GSIBs. Any future Council-designated nonbank would file full and
targeted plans on a two-year cycle, unless the agencies jointly
determine the firm should file full and targeted plans on a three-
year cycle.
\19\ Firms subject to Category II standards will be: (1) U.S.
firms with (a) >=$700b average total consolidated assets; or (b)
>=$100b average total consolidated assets with >=$75b in average
cross-jurisdictional activity and (2) foreign banking organizations
(FBOs) with (a) >=$700b average combined U.S. assets; or (b) >=$100b
average combined U.S. assets with >=$75b in average cross-
jurisdictional activity.
\20\ Firms subject to Category III standards will be: (1) U.S.
firms with (a) >=$250b and <$700b average total consolidated assets;
or (b) >=$100b average total consolidated assets with >=$75b in
average total nonbank assets, average weighted short-term wholesale
funding, or average off-balance sheet exposure and (2) FBOs with (a)
>=$250b and <$700b average combined U.S. assets; or (b) >=$100b
average combined U.S. assets with >=$75b in average total nonbank
assets, average weighted short-term wholesale funding, or average
off-balance sheet exposure.
\21\ Other FBOs subject to resolution planning pursuant to
statute are FBOs with >=$250b global consolidated assets that are
not subject to Category II or Category III standards.
[GRAPHIC] [TIFF OMITTED] TR01NO19.021
Foreign banking organizations that are expected to be triennial
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reduced filers
Agricultural Bank of China
Australia and New Zealand Banking Group
Banco Bradesco
Banco De Sabadell
Banco Do Brasil
Banco Santander
[[Page 59199]]
Bank of China
Bank of Communications
Bank of Montreal
Bank of Nova Scotia
Bayerische Landesbank
BBVA Compass
BNP Paribas
BPCE Group
Caisse Federale de Credit Mutuel
Canadian Imperial Bank of Commerce
China Construction Bank Corporation
China Merchants Bank
CITIC Group Corporation
Commerzbank
Commonwealth Bank of Australia
Cooperative Rabobank
Credit Agricole Corporate and Investment Bank
DNB Bank
DZ Bank
Erste Group Bank AG
Hana Financial Group
Industrial and Commercial Bank of China
Industrial Bank of Korea
Intesa Sanpaolo
Itau Unibanco
KB Financial Group
KBC Bank
Landesbank Baden-Weurttemberg
Lloyds Banking Group
National Agricultural Cooperative Federation
National Australia Bank
Nordea Group
Norinchukin Bank
Oversea-Chinese Banking Corporation
Shinhan Bank
Skandinaviska Enskilda Banken
Societe Generale
Standard Chartered Bank
State Bank of India
Sumitomo Mitsui Financial Group
Sumitomo Mitsui Trust Holdings
Svenska Handelsbanken
Swedbank
UniCredit Bank
United Overseas Bank
Westpac Banking Corporation
Woori Bank
In the proposal, the Board noted that the thresholds and risk-based
indicators identified in the categories were designed to take into
account an individual firm's particular activities and organizational
footprint that may present significant challenges to an orderly
resolution. The Board proposed to apply a uniform threshold of $75
billion for each of these risk-based indicators, based on the degree of
concentration this amount would represent for each firm and the
proportion of the risk factor among all U.S. firms with $100 billion or
more in total consolidated assets that would be included by the
threshold.
In the proposal, the Board noted that increased levels of cross-
jurisdictional activity could increase operational complexity and that
it may be more difficult to resolve or unwind a firm's positions due to
the multiple jurisdictions and regulatory authorities involved and
potential legal or regulatory barriers to transferring financial
resources across borders. Similarly, the Board noted that bank holding
companies with significant nonbank assets would be more likely to be
engaged in activities such as prime brokerage, or complex derivatives
and capital markets activities. Where a firm has not engaged in
planning to address these particular challenges, it is less likely the
firm's resolution would proceed in an orderly manner without unduly
impacting other firms. Regarding weighted short-term wholesale funding,
the Board noted that firms particularly reliant on short-term funding
sources may be more vulnerable to large-scale funding runs or ``fire
sale'' effects on asset prices and therefore proposed to continue to
apply resolution planning requirements to firms with higher levels of
potential liquidity vulnerability, as measured by the firm's weighted
short-term wholesale funding. Finally, the Board noted that where a
firm's activities result in large off-balance sheet exposure, the firm
may be more vulnerable to significant draws on capital and liquidity in
times of stress. The proposal therefore would have continued to apply
resolution planning requirements to firms with this risk-based
indicator.
The agencies received several comments on the use of the four risk-
based indicators and associated thresholds.\22\ One commenter
reiterated concerns that it described in its comment letter on the
notices of proposed rulemaking for the tailoring rules and stated that
its concerns regarding those notices applied equally to the proposed
rule. Another commenter expressed general support for the risk-based
indicator approach. Several commenters recommended changes to the
calibration of U.S. assets and activity in the risk-based indicators
for foreign banking organizations. One commenter argued against the
inclusion of U.S. branches and agencies in the calculation of a foreign
firm's combined U.S. assets or thresholds for risk-based indicators
unless the operations of branches or agencies are significant to a
critical operation. Instead, the commenter recommended that risk-based
indicators be calculated consistent with how the strategic analysis
requirements in the 2011 rule apply to U.S. branches, agencies, and
offices. Another commenter argued against the use of U.S. branch assets
in determining activity in risk-based indicators because branches are
discrete entities from the U.S. intermediate holding companies and
often have more stable funding.
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\22\ This preamble responds to comments received on the proposed
rule regarding the risk-based indicators. Responses to comments
received on the notices of proposed rulemaking for the tailoring
rules and additional information concerning the basis for the risk-
based indicators established under the tailoring rules are included
in the notices of final rulemaking for the tailoring rules. See
Board Final Rule, ``Prudential Standards for Large Bank Holding
Companies, Savings and Loan Holding Companies, and Foreign Banking
Organizations'' published elsewhere in this issue of the Federal
Register.
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The resolution planning requirement currently applies to a foreign
banking organization's entire U.S. operations, including U.S. branches
and agencies. U.S. branches and agencies constitute a significant share
of these foreign banking organizations' presence in the United States.
In addition, the agencies' experience reviewing resolution plans
demonstrates that there are interconnections and dependencies between a
foreign firm's U.S. branches, agencies, and offices and its U.S.
subsidiaries, core business lines, and critical operations. The
commenters' proposals to exclude certain U.S. branches, agencies, and
offices from the calculation of the risk-based indicators or combined
U.S. operations would not be consistent with the objective of measuring
the full scope of potential risks to U.S. financial stability,
including risks associated with operational complexity. Moreover, it is
appropriate to tailor resolution planning requirements based on the
size and complexity of a foreign firm's entire U.S. operations because
the resolution planning requirement applies to a firm's entire U.S.
operations. Accordingly, under the final rule, risk-based indicators
and combined U.S. operations would be measured as proposed, including a
foreign firm's U.S. branches, agencies, and offices.
Two commenters expressed concerns with the use of asset thresholds
to determine a firm's category unless the asset threshold is indexed to
inflation or total U.S. banking assets. As further explained in the
notices of final rulemaking for the tailoring rules, the $100 billion
and $250 billion size thresholds prescribed in the Dodd-Frank Act, as
amended by EGRRCPA, are fixed by statute.\23\ Indexing the other
[[Page 59200]]
thresholds would add complexity, a degree of uncertainty, and potential
discontinuity to the framework. The Board acknowledges the thresholds
should be reevaluated over time to ensure they appropriately reflect
growth on a macroeconomic and industry-wide basis, as well as to
continue to support the objectives of the final rule. The Board plans
to accomplish this by periodically reviewing the thresholds under the
tailoring rules and proposing changes through notice and comment
process, rather than including an automatic adjustment of thresholds
based on indexing.
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\23\ Section 165 of the Dodd-Frank Act does provide the Board
with discretion to establish a minimum asset threshold above the
statutory thresholds for some, but not all, enhanced prudential
standards. However, the Board may only utilize this discretion
pursuant to a recommendation by the Financial Stability Oversight
Council in accordance with section 115 of the Dodd-Frank Act. 12
U.S.C. 5365(a)(2)(B).
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Several commenters discussed the criteria for being subject to
Category II standards. Two commenters supported the calibration of
these criteria as proposed and asserted that no additional risk-based
indicators should be used to determine whether a firm would be subject
to Category II standards. These commenters opposed the use of
additional risk-based indicators (e.g., weighted short-term wholesale
funding, nonbank assets, or off balance-sheet exposure) and stated that
such indicators would only be appropriate if the threshold were set to
$210 billion. Another commenter stated that the criteria for being
subject to Category II standards should not be based on exceeding the
threshold for cross-jurisdictional activity only.
As further explained in the notices of final rulemaking for the
tailoring rules, significant cross-border activity can indicate
heightened interconnectivity and operational complexity. Cross-
jurisdictional activity can add operational complexity in normal times
and complicate the ability of a firm to undergo an orderly resolution
in times of stress, generating risks to financial stability in the
United States. In addition, cross-jurisdictional activity may present
increased challenges in resolution because there could be legal or
regulatory restrictions that prevent the transfer of financial
resources across borders where multiple jurisdictions and regulatory
authorities are involved. The cross-jurisdictional activity indicator
and threshold is intended to identify firms with significant cross-
border activities. Accordingly, the tailoring rules apply Category II
standards to domestic and foreign banking organizations with cross-
jurisdictional activity of $75 billion or more.
Alternative Scoping and Tailoring Criteria
In the proposal, the Board also proposed an alternative approach
for assessing the risk profile and systemic footprint of a U.S. banking
organization and of a foreign banking organization's combined U.S.
operations or U.S. intermediate holding company: Using a single,
comprehensive score. The Board uses an identification methodology
(scoring methodology) to identify a U.S. bank holding company as a U.S.
GSIB and apply risk-based capital surcharges to these firms. The Board
proposed using the same scoring methodology to determine whether to
apply the resolution planning requirements to firms with $100 billion
or more and less than $250 billion in total consolidated assets.\24\
The agencies also proposed using this same scoring methodology to
divide U.S. and foreign firms into groups to determine the frequency
and informational content of resolution plan filings.
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\24\ As discussed in further detail in the proposal, the scoring
methodology in the Board's regulations that is used to calculate a
U.S. GSIB's capital surcharge includes two methods (12 CFR part 217,
subpart H). The first method is based on the sum of a firm's
systemic indicator scores reflecting its size, interconnectedness,
cross-jurisdictional activity, substitutability, and complexity
(method 1). The second method is based on the sum of these same
measures of risk, except that the substitutability measures are
replaced with a measure of the firm's reliance on short-term
wholesale funding (method 2).
---------------------------------------------------------------------------
One commenter directed agency staff to comments on the alternative
scoping criteria in relation to the notices of proposed rulemaking for
the tailoring rules. The comment generally expressed support for the
risk-based indicator methodology rather than the alternative
methodology, which the commenter described as flawed conceptually and
in calibration.
Under the tailoring rules, the Board finalized an indicators-based
approach for applying Category II, III, or IV standards to the firms,
as this approach provides a simple framework that supports the
objectives of risk sensitivity and transparency. To determine whether a
firm with total consolidated assets equal to $100 billion or more and
less than $250 billion is subject to resolution planning requirements,
the Board is finalizing the same indicators-based approach, requiring
any such firm that is subject to Category II or III standards to submit
resolution plans. As under the proposal, and as further described
below, the agencies are similarly finalizing the indicators-based
approach for determining the scope of resolution planning requirements
for firms other than the U.S. GSIBs and nonbank financial companies
supervised by the Board. The Board will continue to use the scoring
methodology to apply Category I standards to a U.S. GSIB and, as under
the proposal, the final rule relies on this identification for
determining the scope of resolution planning requirements for these
firms.
U.S. Covered Companies With $100 Billion or More and Less Than $250
Billion in Total Consolidated Assets
Under the proposed rule, resolution planning requirements would not
have applied to U.S. firms with total consolidated assets of $100
billion or more and less than $250 billion whose activities did not
exceed the threshold for any of the risk-based indicators (i.e., cross-
jurisdictional activity, nonbank assets, weighted short-term wholesale
funding, or off-balance-sheet exposure). In the proposal, the Board
noted that it was less likely that one of these firms' failure would
present a risk of serious adverse effects on U.S. financial stability
and that requiring a plan for rapid and orderly resolution in
bankruptcy from such a firm may impose burden without sufficient
corresponding benefit.
The Board received several comments on this aspect of the proposal.
One commenter expressed support for not applying the resolution
planning requirements to U.S. firms subject to Category IV standards.
Other commenters stated that the Board should apply resolution planning
requirements to all firms with $100 billion or more and less than $250
billion in total consolidated assets. A further commenter expressed
concern that the proposal would not apply resolution planning
requirements to any firm with less than $250 billion in total
consolidated assets. The commenter asserted that, instead, resolution
planning should be required for all firms with more than $100 billion
in total consolidated assets because the Corporation's resolution
authority under the Federal Deposit Insurance Act does not extend
beyond a covered company's insured depository institution subsidiary,
and that the resolution plan process under the final rule should be
coordinated with the IDI rule. Another commenter expressed concerns
about removing the resolution planning requirements for large regional
banks, asserting that the agencies did not explain sufficiently the
rationale for removing the requirement for U.S. firms subject to
Category IV standards.
The Board is finalizing this aspect of the proposal as proposed. In
response to comments on this aspect of the final
[[Page 59201]]
rule, the Board notes that the proposal and final rule would continue
to apply resolution planning requirements to some firms with $100
billion or more and less than $250 billion in total consolidated
assets.\25\ As explained above, the final rule relies on the risk-based
indicators to apply resolution planning requirements to firms in this
group. The Board believes the risk-based indicators are an effective
means for identifying those firms with total consolidated assets of
$100 billion or more and less than $250 billion whose material
financial distress or failure would pose a threat to U.S. financial
stability, for the reasons described above, in the proposal, and in the
proposed and final tailoring rules. Where a firm's activities in one or
more of the risk-based indicators exceed the $75 billion threshold, it
is more likely that its failure could adversely affect U.S. financial
stability; accordingly, the firm should be subject to resolution
planning requirements. However, when a firm's activities do not exceed
one or more of the risk-based indicators and its total consolidated
assets are less than $250 billion, it is less likely that the firm's
failure would have serious adverse effects on U.S. financial stability
and, accordingly, to impose resolution planning requirements on such a
firm would not yield a sufficient corresponding benefit.
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\25\ For this purpose, total consolidated assets are determined
under the tailoring rules. Accordingly, a firm has total
consolidated assets of $100 billion or more if the average of its
total consolidated assets as reported on multiple regulatory
reports, as specified in the tailoring rules, is $100 billion or
more.
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Foreign-Based Covered Companies With $100 Billion or More and Less Than
$250 Billion in Total Global Assets
In the proposal, the Board proposed applying resolution planning
requirements to foreign banking organizations with (a) total global
assets equal to $100 billion or more and less than $250 billion, (b)
combined U.S. assets equal to $100 billion or more, and (c) $75 billion
or more in any of the following risk-based indicators measured based on
combined U.S. operations: Cross-jurisdictional activity, nonbank
assets, weighted short-term wholesale funding, or off-balance-sheet
exposure. The Board noted in the proposal that it would no longer
require resolution plan submissions from foreign banking organizations
with total global assets equal to $100 billion or more and less than
$250 billion where (a) the firm has combined U.S. assets below $100
billion or (b) the firm does not have $75 billion or more in any of the
risk-based indicators measured based on combined U.S. operations.
One commenter asserted that resolution planning requirements should
be eliminated entirely for foreign firms with limited U.S. operations,
regardless of their total global asset size, or, in the alternative,
resolution planning requirements should apply to a foreign firm subject
to Category IV standards only if it is a global systemically important
financial institution. The commenter asserted that foreign firms should
also be permitted to comply with resolution planning requirements
pursuant to the final rule by certifying compliance with the home
country resolution requirements.
The Board is finalizing this aspect of the proposal as proposed.
The Board notes that the Dodd-Frank Act, as amended by EGRRCPA,
requires all foreign banking organizations with $250 billion or more in
total global assets to submit resolution plans, and a certification of
home country compliance by itself would not satisfy this statutory
standard. Moreover, as explained above, the Board believes that the
risk-based indicators are an effective means for identifying those
firms that should be subject to resolution planning requirements due to
the potential effect on U.S. financial stability of their financial
distress or failure.
Exiting Covered Company Status
The proposal would have updated the methodology for ascertaining
when a firm ceased to be a covered company. With respect to a decrease
in assets, under the proposal, a U.S. firm would have ceased to be a
covered company when its total consolidated assets are less than $250
billion based on total consolidated assets for each of the four most
recent calendar quarters (and it is not otherwise subject to Category
II or Category III standards based on the risk-based indicators
identified above). A foreign banking organization that files quarterly
reports on Form FR Y-7Q similarly would have been assessed on the basis
of its total global assets for each of the four most recent calendar
quarters. A foreign banking organization that files the Y-7Q report
annually rather than quarterly would have been assessed based on its
total global assets over two consecutive years. The agencies would have
retained the discretion to jointly determine that a firm is no longer a
covered company at an earlier time than it would be pursuant to its
quarterly or annual reports. Under the proposal, firms that would have
ceased to be, or to be treated as, bank holding companies or that were
de-designated by the Council for supervision by the Board would no
longer have been covered companies and would not have had any further
resolution planning requirements as of the effective date of the
applicable action unless there were a subsequent change to their
status. The agencies received no comments on this aspect of the
proposal and are finalizing it as proposed, but have clarified in the
final rule that a firm's total consolidated assets are determined on
the basis of total consolidated assets as reported on each of its four
most recent quarterly reports or two most recent annual reports.
2. Filing Groups and Filing Cycle
The proposal would have divided covered companies into three groups
of filers: (a) Biennial filers; (b) triennial full filers; and (c)
triennial reduced filers. Under the proposal, all covered companies
would have had a July 1 submission date, instead of the current
division between July 1 and December 31.
The agencies received comments offering general support for the
longer filing cycle and asserting that it would allow filers sufficient
time to consider firm-specific feedback. The agencies also received
comments suggesting that the current annual filing requirement be
retained to reflect the potential for rapid changes to firms' structure
and financial condition that may cause resolution plans to become
outdated.
The agencies note that the annual submission requirement has been a
challenging constraint for both the firms and the agencies. The annual
requirement did not provide sufficient time for the agencies to review
the resolution plans and develop useful firm-specific feedback or
general guidance, and for the firms to consider that firm-specific
feedback or general guidance in their next resolution plan submissions.
Independent of the proposal, the agencies have extended the resolution
plan filing deadlines over the past few submission cycles to provide at
least two years between resolution plan submissions. Accordingly, the
agencies are finalizing an extended filing cycle, consistent with the
proposal and described in more detail below.
The agencies received one comment regarding the proposal to move
the submission date to July 1 for all filers. The commenter suggested
that the 2011 rule's December 31 submission date be retained for
triennial full filers subject to Category III standards as this would
allow more efficient allocation of resources for resolution planning
and other supervisory activities. The
[[Page 59202]]
agencies are finalizing the July 1 submission date as proposed. Having
one resolution plan submission date will simplify administration of the
final rule for filers and the agencies, such as when filers change
filing groups.
Biennial Filers
In the proposal, the biennial filers would have comprised firms
subject to Category I standards, or the U.S. GSIBs, as well as any
nonbank financial company supervised by the Board that has not been
jointly designated as a triennial full filer by the agencies. The
agencies noted that any such designation of a nonbank financial company
would be made taking into account the relevant facts and circumstances,
including the degree of systemic risk posed by the particular covered
company's failure.
Since the failure of a firm in this group would pose the most
serious threat to U.S. financial stability, the proposal would have
applied the most stringent resolution planning requirements to biennial
filers in terms of both submission frequency and informational content.
Under the proposed rule, the biennial filers would have been required
to submit a resolution plan every two years, alternating between a full
resolution plan, subject to the waiver option, and a targeted
resolution plan. The agencies noted that the U.S. GSIBs' resolution
plans had matured over time and these firms had taken meaningful steps
to develop the foundational capabilities necessary for the
implementation of their resolution strategies. In addition, in recent
years, the agencies have provided extensions under the 2011 rule to
provide the biennial filers with two years between resolution plan
submissions, so formalization of a two-year cycle would be consistent
with established practice.
The agencies received two comments on this aspect of the proposal.
One commenter stated that the U.S. GSIBs should be required to submit
full resolution plans every two years. Another commenter expressed
general opposition to the two-year cycle and asserted that it would be
insufficient to capture important information about firms'
resolvability due to the speed with which changes can occur.
The agencies are finalizing this aspect of the proposal as
proposed. After several rounds of resolution plans, firm-specific
feedback, and general guidance, the U.S. GSIBs' resolution plans have
matured over time, making more frequent submissions generally
unnecessary. In addition, experience under the 2011 rule has shown that
an annual resolution plan submission schedule is too challenging a
constraint for the reasons described above. The agencies note, however,
that they retain the ability under the final rule to obtain key
information between resolution plan submissions, including by requiring
interim updates and receiving notices of extraordinary events, which
will allow the agencies to remain informed of material developments
affecting resolvability notwithstanding the less frequent filing cycle.
The agencies also will have authority to require a full resolution plan
instead of a targeted resolution plan and to move a resolution plan
submission date.
Triennial Full Filers
The proposal identified the second filing group, triennial full
filers, as firms subject to Category II or III standards under the
notices of proposed rulemaking for the tailoring rules, as well as any
nonbank financial company supervised by the Board that was designated
as a triennial full filer by the agencies.
The agencies proposed that triennial full filers be on a three-year
filing cycle rather than a two-year filing cycle because the failure of
a triennial full filer would generally be less likely to pose a threat
to U.S. financial stability as compared to the failure of a biennial
filer. The proposal would have required triennial full filers to submit
a resolution plan every three years, alternating between a full
resolution plan and a targeted resolution plan.
The agencies received several comments on the proposed three-year
filing cycle for triennial full filers. One commenter expressed support
for the proposed three-year cycle, and alternating between full and
targeted resolution plans for firms subject to Category III standards.
Another commenter stated that these firms should be on a biennial
schedule, alternating between full and targeted resolution plans. One
commenter expressed general opposition to the three-year cycle and
asserted that it would be insufficient to capture important information
about firms' resolvability due to the speed at which change can occur.
Another commenter stated that firms that would be triennial full filers
under the proposal should be allowed to submit targeted resolution
plans every three years, absent an extraordinary event.
The agencies are finalizing as proposed the three-year cycle for
triennial full filers, alternating between full and targeted resolution
plans. While the failure of a firm in this group could threaten U.S.
financial stability, such failure is less likely to threaten U.S.
financial stability as compared to the failure of a biennial filer.
Accordingly, it is appropriate to tailor this group's requirements
relative to the requirements for biennial filers. Given these firms'
size and complexity, the agencies have determined that a triennial
schedule is appropriate. In addition, as with biennial filers, the
agencies would retain authority to require interim updates and full
resolution plans, and to move resolution plan submission dates, and
firms would be required to submit notices of extraordinary events,
which would allow the agencies to remain informed of material
developments affecting resolvability that occur between resolution plan
submissions.
The agencies are not adopting commenters' recommendation to limit
all resolution plan submissions from triennial full filers to targeted
resolution plans absent an extraordinary event because the agencies
believe that, given the potential risks inherent in firms in this group
and because firms and markets change over time, it is appropriate for
these firms to submit a full resolution plan at least every six years.
In addition, the agencies note that a firm may apply for a waiver from
certain informational content requirements in its full resolution plan
and incorporate by reference information in a prior submission that
remains accurate in all respects that is material to the covered
company's resolution plan, as described further below. These aspects of
the final rule should appropriately tailor the burden of preparing a
full resolution plan.
In the proposal, the agencies also noted that the proposed
triennial full filer group would have included foreign banking
organizations that had previously received detailed general guidance
from the agencies.\26\ These firms have taken important steps to
enhance their resolvability and facilitate their orderly resolution in
bankruptcy and have significantly reduced the size and risk profiles of
their U.S. operations since the passage of the Dodd-Frank Act and in
response to the implementation of Regulation YY,\27\ although the
failure of one of these firms could potentially pose a threat to U.S.
financial stability. The agencies stated that it was appropriate that
these firms be part of
[[Page 59203]]
the triennial full filer group and submit resolution plans on the
three-year filing cycle because the preferred outcome for each of these
foreign banking organizations is a successful home country resolution
using a single point of entry resolution strategy, not the resolution
strategy described in its U.S. resolution plan.
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\26\ See, e.g., Guidance for 2018 Sec. 165(d) Annual Resolution
Plan Submissions By Foreign-based Covered Companies that Submitted
Resolution Plans in July 2015, https://www.federalreserve.gov/newsevents/pressreleases/files/bcreg20170324a21.pdf, https://www.fdic.gov/resauthority/2018subguidance.pdf.
\27\ 12 CFR part 252.
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The agencies received one comment on this aspect of the proposal.
The commenter asserted that the largest and most complex foreign
banking organizations should submit resolution plans every two years,
alternating between full and targeted resolution plans, because they
pose similar risks to the U.S. financial system as the risks posed by
the U.S. GSIBs. The commenter also stated that the rationale that these
firms would be resolved through a home country single point of entry
strategy was not compelling because the purpose of the resolution
planning requirement is to plan for the failure of a U.S. entity.
The agencies note that the U.S. footprints of the larger and more
complex foreign banking organizations are significantly smaller than
those of, and do not present the same complexities as, the U.S. GSIBs.
Consequently, while the failure of these operations may threaten the
U.S. financial system, it is less likely than the failure of a U.S.
GSIB, regardless of whether the global firm executes its preferred
resolution strategy successfully. Accordingly, the agencies believe
that a longer filing cycle is appropriate for these firms and are
finalizing this aspect of the proposal as proposed.
Triennial Reduced Filers
The proposal identified a third group, triennial reduced filers,
which would have consisted of any covered company that was not subject
to Category I, II, or III standards and was not a nonbank financial
company supervised by the Board. The proposal would have applied less
stringent resolution planning requirements to firms in this group
because they do not have the same size or complexity as firms that
would have been subject to Category I, II, or III standards. Under the
proposal, triennial reduced filers would have been required to submit
reduced resolution plans every three years. The proposal also would
have required a new triennial reduced filer to submit a full resolution
plan as its initial submission and thereafter a reduced resolution plan
every three years.
The agencies received one comment on this aspect of the proposal.
The commenter asserted that some of the larger triennial reduced filers
should be on a biennial schedule, alternating between full and targeted
resolution plans, and supported applying a longer filing cycle to the
U.S. operations of certain smaller foreign firms.
The agencies are finalizing the triennial reduced filer group and
related filing cycle as proposed. Given the limited scope of these
firms' U.S. operations and activities, the agencies have determined
that it is appropriate for triennial reduced filers to submit reduced
resolution plans on a three-year cycle; this requirement will
appropriately tailor burden for these firms while ensuring that the
agencies remain apprised of changes that could materially affect the
firms' resolvability or resolution strategies. In addition, the failure
of the U.S. operations of one of these firms may threaten the U.S.
financial system, but failure of these operations poses a lower risk
than the failure of a biennial filer or triennial full filer.
Nonetheless, the agencies retain the ability to obtain additional
information between resolution plan submissions, as mentioned above,
and to require any firm to submit a full resolution plan, as described
below.
Moving Submission Dates, Changing Plan Content, and Requiring Interim
Updates
The proposal would have provided the agencies the flexibility to
move covered companies' submission dates. The proposal would have
required the agencies to notify a covered company that had previously
submitted a resolution plan at least 180 days prior to the new
submission date. A new covered company would have received at least 12
months' notice prior to the new submission date. Consistent with the
2011 rule, the proposal also would have allowed agencies to require
covered companies to provide interim updates within a reasonable amount
of time. In addition, the proposal would have allowed the agencies to
jointly require that a covered company submit a full resolution plan
within a reasonable period of time.
The agencies received several comments on these aspects of the
proposal. Commenters asserted that the final rule should provide a
minimum of 12 months' notice prior to requiring a full resolution plan
or an off-cycle submission and six or 12 months' notice prior to an
interim update. Commenters also asserted that the agencies should
clarify that a ``reasonable amount of time'' for prior notice of a full
resolution plan submission would be at least 12 months' notice. These
commenters generally asserted that their proposed notice periods are
necessary to provide covered companies with sufficient time to prepare
their resolution plans.
The final rule contains certain changes from the proposal in
response to these commenters. Under the final rule, the agencies will
provide at least 12 months' notice prior to requiring a full resolution
plan submission or an off-cycle submission (i.e., a submission on a
date other than the regularly scheduled date for the covered company's
filing group).\28\ The agencies believe that these changes will enhance
the predictability of resolution plan submission dates, provide
appropriate time for resolution plan preparation, and help facilitate
covered companies' resource allocation decisions.
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\28\ If the agencies were to require an off-cycle submission
from a covered company, the covered company's next resolution plan
submission date after the off-cycle submission date would be
determined based on the off-cycle submission date. For example, if
the agencies were to move a triennial full filer's submission date
from July 1, 2027 to July 1, 2026, the covered company's next
resolution plan submission date after July 1, 2026 would be July 1,
2029 (absent the agencies jointly moving the July 1, 2029 submission
date). The agencies will consider the impact on the covered
company's future resolution plan submission dates and any deadlines
related to those submission dates when requiring an off-cycle
submission.
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Consistent with the proposal and the 2011 rule, the final rule
provides that the agencies may require a covered company to submit an
interim update within a reasonable amount of time, as jointly
determined by the agencies. An interim update is intended to be a
flexible tool for the agencies to obtain information between resolution
plan submission dates. When requiring an interim update, the agencies
will specify the portions or aspects of a previously submitted
resolution plan that a firm is required to update. Accordingly, the
informational content requirements for an interim update are not fixed,
making it difficult to identify a specific period that is necessary to
prepare every interim update. While a six- or 12-month period may be
appropriate in certain circumstances, a shorter time period may be
appropriate in other circumstances, especially where an interim update
would contain only limited information. Accordingly, the agencies do
not believe that it would be appropriate to introduce a fixed notice
period for an interim update.
The final rule provides that the agencies may require a covered
company to submit a full resolution plan instead of a targeted or
reduced resolution plan that the covered company is otherwise required
to submit. The full resolution plan's submission date will be the
submission date for the replaced targeted or reduced
[[Page 59204]]
resolution plan.\29\ The submission of such a full resolution plan will
not change the type of resolution plan that the covered company is
otherwise thereafter required to submit.
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\29\ Accordingly, a firm could be required to submit a full
resolution plan while the other members of the firm's filing group
are required to submit targeted or reduced resolution plans on that
submission date. Thereafter, the firm that was required to submit a
full resolution plan will revert to its filing group's regular
resolution plan type submission schedule.
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The agencies do not expect to regularly exercise this authority.
However, it may be necessary to require a full resolution plan instead
of a targeted or reduced resolution plan under unusual circumstances,
and the agencies have preserved this authority as a means for the
agencies to receive additional information from firms when appropriate.
The agencies could, for example, exercise their discretion to require a
triennial reduced filer whose activities have evolved gradually (rather
than as the result of a single material event) to submit full
resolution plan in lieu of a reduced resolution plan if the aggregate
effect of those changes might meaningfully increase the risk that the
firm's failure could have serious adverse effects on U.S. financial
stability.
B. Resolution Plan Content
1. General Guidance and Firm-Specific Feedback
The preamble to the proposal specified that general guidance
previously directed to specific full resolution plan filers concerning
the content of their upcoming submissions would continue to be directed
to those individual firms.
The agencies received several comments related to prior resolution
planning general guidance and firm-specific feedback. Some commenters
suggested that existing resolution planning general guidance directed
to some firms should be consolidated and tailored among the different
categories of firms, that any future general guidance be subject to
notice and public comment, and that the agencies commit to providing
firm-specific feedback on resolution plans and any general guidance no
later than 12 months prior to a covered company's resolution plan
submission date. These commenters asserted in particular that covered
companies subject to Category II or III standards should not receive
general guidance that is similar to the general guidance that is
directed to the U.S. GSIBs, which are subject to Category I standards.
A few commenters suggested that the agencies clarify to whom existing
general guidance is directed, and one commenter suggested incorporating
existing general guidance into the final rule.
The final rule provides that, absent extenuating circumstances, the
agencies will provide a firm with notice of any deficiency or
shortcoming identified by the agencies and any other firm-specific
feedback regarding its resolution plan no later than 12 months after
the later of (1) the date when the firm submitted the resolution plan
and (2) the date by which the firm was required to submit the
resolution plan. The agencies recognize firms' strong interest in
prompt firm-specific feedback from the agencies and in having
sufficient time to respond thereto, and would expect to exercise their
authority to provide such notice after the one-year period only when
providing the notice within a year would be impractical due to
circumstances outside the agencies' control. Absent extenuating
circumstances, this approach will provide a firm with at least one year
to consider any and all firm-specific feedback before it is next
required to submit a resolution plan. However, the agencies would
retain the authority to require a firm to submit within a shorter
period a revised resolution plan that addresses deficiencies or an
interim update.
In addition to firm-specific feedback that provides the agencies'
views on a particular resolution plan,\30\ the agencies may continue to
issue general guidance regarding future resolution plan submissions.
The firm-specific feedback letters sent to-date to firms are examples
of the firm-specific feedback that the agencies will provide to firms
within the 12-month period described in the previous paragraph. While
both firm-specific feedback (other than a notice of a deficiency) and
general guidance are meant to assist firms in preparing future
resolution plans, general guidance outlines the agencies' expectations
or priorities and articulates the agencies' general views regarding
resolution plans more generally than firm-specific feedback, which
presents the agencies' views on a particular resolution plan. The
agencies will strive to provide final general guidance at least a year
before the next resolution plan submission date of firms to which the
general guidance is directed.
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\30\ The agencies may provide the same or substantially similar
firm-specific feedback to more than one firm. For example, some
elements of firm-specific feedback provided to the U.S. GSIBs may be
the same or substantially similar when certain aspects of their
resolution plans are substantially similar.
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Existing general guidance, including its content and scope, is not
modified by the final rule. Accordingly, the detailed general guidance
that certain foreign banking organizations have received from the
agencies (FBO guidance) \31\ continues to be directed to only those
firms and is not directed to all triennial full filers as a result of
the changes from the 2011 rule reflected in the final rule. Likewise,
general guidance directed to certain domestic banking organizations
(domestic guidance) \32\ continues to be directed to only those
domestic banking organizations to which it was directed prior to
adoption of the final rule. Because general guidance sets forth non-
binding expectations as opposed to rule-based requirements, the
agencies do not believe that it is necessary or appropriate to
incorporate all general guidance into the final rule.
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\31\ See Guidance for 2018 Sec. 165(d) Annual Resolution Plan
Submissions By Foreign-based Covered Companies that Submitted
Resolution Plans in July 2015, https://www.federalreserve.gov/newsevents/pressreleases/files/bcreg20170324a21.pdf, https://www.fdic.gov/resauthority/2018subguidance.pdf.
\32\ See Guidance for Sec. [thinsp]165(d) Resolution Plan
Submissions by Domestic Covered Companies applicable to the Eight
Largest, Complex U.S. Banking Organizations, 84 FR 1438, 1449
(February 4, 2019).
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The agencies sought and received public comment on the domestic
guidance in 2018. The notice and comment process allowed the agencies
to gain valuable insight, which led to improvements and clarifications
in the final domestic guidance. Similar to the domestic guidance, the
agencies intend to consolidate and request public comment in the near
future on all aspects of the FBO guidance, including the informational
content expectations and the subset of firms to which it is directed.
The agencies expect that this process will lead to similar benefits for
the FBO guidance. Similarly, the agencies intend to make any future
general guidance concerning resolution planning available for public
comment, and will endeavor to finalize any such general guidance at
least one year prior to the submission date for the first resolution
plan submission to which it would apply. The agencies will continue to
provide firm-specific feedback on resolution plan submissions without
first making that firm-specific feedback available for notice and
comment.
2. Material Changes and Extraordinary Events
The proposal would have revised and clarified the requirements for
filing a notice of material events to reflect the creation of a
material changes definition. A material change would have been defined
as any event,
[[Page 59205]]
occurrence, change in conditions or circumstances, or other change that
results in, or could reasonably be foreseen to have a material effect
on the resolvability of the covered company, the covered company's
resolution strategy, or how the covered company's resolution strategy
is implemented. Full, targeted, and reduced resolution plans would have
been required to include information about material changes since a
covered company's previously submitted resolution plan and changes the
covered company made to its resolution plan in response.
Because of the broad definition of ``material change,'' the
agencies determined that a notice requirement triggered by the
occurrence of a material change between resolution plan submissions was
not appropriate and instead proposed the concept of an extraordinary
event, which would have required such a notice. Under the proposed
rule, a material merger, acquisition of assets or other similar
transaction, or a fundamental change to a covered company's resolution
strategy would have been an extraordinary event requiring notice to the
agencies between resolution plan submissions.
One commenter supported the inclusion in the proposal of the terms
``material change'' and ``extraordinary event,'' while another
commenter expressed concern that the proposal put too much reliance on
firms self-identifying material changes.
The final rule includes the proposed provisions regarding
``material changes'' \33\ and ``extraordinary events,'' with the
clarification that a notice related to an extraordinary event must
describe the event and explain how the event affects the resolvability
of the firm. The agencies believe that firms can effectively identify
these types of events, and note that the rule's requirement that the
board of directors (or delegee in the case of a foreign firm) approve
each resolution plan should help ensure that firms take appropriate
steps to identify material changes. In addition, the final rule has
been revised from the proposal to require that a firm affirmatively
state in its resolution plan that no material change has occurred since
its prior resolution plan submission if the resolution plan does not
identify any material changes. The agencies believe that this
clarification will further help to ensure that firms give due attention
to the requirement to identify material changes.
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\33\ As noted in the proposal, such changes include the
identification of a new critical operation or core business line;
the identification of a new material entity or the de-identification
of a material entity; significant increases or decreases in the
business, operations, or funding of a material entity; or changes in
the primary regulatory authorities of a material entity or the
covered company on a consolidated basis. Other such changes include
material changes in operational and financial interconnectivity,
both those that are intra-firm and external. Examples of such
operational interconnectivity include reliance on affiliates for
access to key financial market utilities or critical services, or
significant reliance on the covered company by other firms for
certain Payments, Clearing, and Settlement (PCS) services, including
agent bank clearing or nostro account clearing, or government
securities settlement services. Examples of such financial
interconnectivity include a material entity becoming reliant on an
affiliate as a source for funding or collateral, or the covered
company becoming a major over-the-counter derivatives dealer.
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3. Full Resolution Plans
The proposal would not have generally modified the components or
informational content requirements of a full resolution plan. Through
numerous resolution plan submissions, the agencies and firms have
gained familiarity with the format and content of the information
required to be submitted pursuant to the 2011 rule. The agencies also
recognize the utility of the existing informational content
requirements for full resolution plans. Focus on these items has
facilitated resolution plan and resolvability improvements,
particularly by the largest and most complex firms.
Several commenters suggested that the proposal tailor the full
resolution plan informational content requirements between categories
of firms, as well as among domestic and foreign firms based on their
relative risk to U.S. financial stability. One commenter suggested that
the contents of a full resolution plan should be further tailored for
foreign firms, focus on critical operations in the United States, and
include U.S. branches in the firm's strategic analysis only if they are
significant to a critical operation. The commenter also suggested that
the agencies should revise the definition of ``covered company'' to
clarify that the strategy for a foreign firm need only focus on
resolution of its U.S. core business lines, critical operations, and
material entities. The commenter also suggested that the agencies
confirm that foreign firms that have filed resolution plans under the
2011 rule will not be subject to requirements that impose greater
burdens than applied previously, and that any new requirements be based
on the occurrence of extraordinary events.
The agencies are not changing the informational content
requirements of a full resolution plan in the final rule from the
proposal, other than requiring an affirmation that no material change
has occurred, if applicable. With respect to differentiation of
requirements between domestic and foreign firms, section __.5(a) of the
final rule appropriately distinguishes between informational content
requirements for domestic firms and foreign firms by focusing foreign
firms' resolution plans on information related to their U.S.
operations, consistent with the 2011 rule. The agencies do not believe
that it is appropriate to limit resolution plan content to operations
that are related to a critical operation because the Dodd-Frank Act's
resolution planning requirement requires firms to plan generally for
their rapid and orderly resolution. Similarly, nothing in the Dodd-
Frank Act suggests that branches should be categorically excluded as
suggested. However, the agencies note that, consistent with the 2011
rule, the final rule limits the strategic analysis requirements
relating to material entities that are subject to an insolvency regime
other than the Bankruptcy Code (including branches) by allowing covered
companies to exclude such entities from their strategic analysis unless
the entities have $50 billion or more in total assets or conduct a
critical operation. The agencies have found this limitation to
appropriately capture the need for information about material entities
that may affect U.S. financial stability and accordingly are retaining
it under the final rule.
Although the informational content requirements for resolution
plans are not differentiated among filing groups in the final rule, the
firm-initiated waiver request process will enable further tailoring of
the informational content requirements of full resolution plans based
on the attributes and risks posed by a particular covered company and
the content of firms' most recent submissions. In addition, the
agencies will retain the authority to tailor informational content
requirements through waivers on the agencies' own initiative and will
continue to communicate their tailored expectations for individual
firms' resolution plans through firm-specific feedback. Moreover, as
explained in more detail below, under the final rule the firm-initiated
waiver request process would be available only to triennial full filers
and triennial reduced filers. As a result, the final rule would keep in
place all informational content requirements for biennial filers' full
resolution plans unless the agencies grant a waiver on their own
initiative. As explained below, this change to the process for covered
companies to request waivers reflects that among all categories of
covered companies, biennial filers' material financial distress or
failure
[[Page 59206]]
would be most likely to pose risks to U.S. financial stability, so
their full resolution plans should, as a general matter, be the most
comprehensive. The agencies believe that this procedural change is also
responsive to commenters' concerns about the degree of tailoring of
informational content requirements between biennial filers and
triennial full filers. Accordingly, the agencies believe that the final
rule reflects appropriate tailoring of informational content among
different categories of covered companies.
4. Waivers of Informational Content Requirements
The proposal would have continued to permit the agencies to waive
certain informational content requirements for one or more firms on the
agencies' joint initiative, given that through a covered company's
repeated resolution plan submissions, certain aspects of its resolution
plan may reach a steady state or become less material such that regular
updates would not be useful to the agencies in their review of the
resolution plan. The proposal also introduced a process whereby a
covered company that had previously submitted a resolution plan would
have been able to apply for a waiver of certain informational content
requirements of a full resolution plan. Under the proposal, firms would
have been able to submit one waiver request per filing cycle, which
would have included a public section containing the requirements sought
to be waived. These requests would have been required to be submitted
at least 15 months before the submission date and include all
information necessary to support the request. A waiver request would
have been automatically granted on the date that was nine months prior
to the submission date for the resolution plan to which it related if
the agencies did not jointly deny the waiver prior to that date. The
proposal would have enabled the agencies to deny a waiver in their
discretion.
Several commenters supported the firm-initiated waiver request
process, noting that the process would help streamline submissions and
that automatically approving waivers unless jointly denied would ensure
that requests would not be unduly delayed. One of those commenters
suggested that the waiver should be made automatic for filers that
qualified to submit tailored resolution plans under the 2011 rule,
while others, as discussed above, generally contended that different
categories of filers should be subject to different levels of
resolution plan informational content requirements. Other commenters
expressed concern that the firm-initiated waiver request process was
unnecessary or would inappropriately reduce resolution plan content
requirements, increase burden on the agencies, and be biased in favor
of approval. One commenter suggested that waivers should be required to
be approved by both agencies. This commenter was further concerned that
the agencies could grant waivers for multiple submission cycles,
effectively undermining the proposed rule's limit of one waiver request
per submission cycle. Another commenter stated that providing for
automatic approval of waivers when the agencies do not jointly deny
them could result in the loss of important information based on the
challenges of coordinating joint agency action.
The final rule retains both the agencies' ability to waive certain
informational content requirements on their joint initiative and the
firm-initiated waiver request process introduced in the proposal, with
some modifications. In response to concerns raised about the firm-
initiated waiver request process, and to suggestions that the agencies
should take additional steps to tailor the informational content
requirements between biennial filers and triennial full filers, the
agencies have revised the process for covered companies to request
waivers. The agencies have determined that the firm-initiated waiver
process should not be extended to biennial filers in light of the
additional risks that these firms present. Because the concerns noted
above outweigh the advantages of a firm-initiated waiver process for
biennial filers, the agencies are limiting firm-initiated waiver
requests to triennial full filers and triennial reduced filers.\34\ As
under the 2011 rule, the agencies have the authority to jointly waive
one or more of the resolution plan requirements on their own initiative
for any firm, including any biennial filer. This procedural change will
help to address these commenters' concerns by ensuring that, absent the
agencies granting a waiver on their own initiative, all full resolution
plan informational content requirements will remain in place for
biennial filers, whose material financial distress or failure would be
most likely to pose a threat to U.S. financial stability.
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\34\ Waiver requests will generally have limited application to
triennial reduced filers under the final rule because waiver
requests do not apply to a covered company's initial full resolution
plan or reduced resolution plans. However, the firm-initiated waiver
request process could apply to a triennial reduced filer if the
agencies were to require it to submit a full resolution plan with at
least 18 months' prior notice.
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The agencies believe that for triennial full filers and triennial
reduced filers, waiver requests will be a useful means to tailor the
informational content of resolution plans in a manner that will be both
efficient for the agencies and transparent to the public and,
accordingly, the final rule permits waiver requests from these firms.
Relative to the proposed rule, the final rule changes the procedure
by which the agencies act on waiver requests. Under the proposal, a
waiver request would have been automatically approved if the agencies
did not jointly deny it before a certain date. Under the final rule, a
waiver request is automatically denied if the agencies do not jointly
approve it before a certain date. The agencies believe that this change
from the proposal will be more consistent with other provisions of the
final rule that require joint agency agreement. The agencies will
nonetheless endeavor to respond to waiver requests in a timely manner.
Furthermore, safeguards are in place to ensure that firm-initiated
waivers would not inappropriately reduce resolution plan content
requirements or otherwise favor filers and that the firm-initiated
waiver request process will not be unnecessarily burdensome for the
agencies or inefficient. For example, firms can only request waivers
for full resolution plans and firms can only submit one waiver request
per full resolution plan submission. In addition, firm-initiated
waivers are not permitted for some of the most critical informational
content, including the core elements required for a targeted resolution
plan, any information specifically required pursuant to section 165(d)
of the Dodd-Frank Act, information about material changes, and
information about deficiencies and shortcomings. Moreover, the timing
for the agencies' processing of waiver requests has been structured to
ensure that the agencies have sufficient opportunity to properly review
and consider the requests.
This preamble describes below the kind of information that waiver
requests should contain, which should help make the firm-initiated
waiver request process more efficient and focused. Finally,
notwithstanding the new firm-initiated waiver request process, the
agencies have retained the ability under the final rule to obtain
additional information in a timely manner through, for example, interim
updates, notices of extraordinary events, and the ability to require
off-cycle resolution plan submissions.
[[Page 59207]]
The agencies are also clarifying in the final rule that, while the
agencies may waive requirements for one or more resolution plan
submissions on their own initiative, firm-initiated waivers apply to
the submission of only a single full resolution plan. The final rule
also clarifies that the agencies may approve or deny a waiver request
in whole or in part.
One commenter suggested changes to the firm-initiated waiver
request process aimed at ensuring transparency and consistency in its
application, including requirements that the agencies consider whether
approved waivers should apply to similarly situated firms and that both
the criteria used in waiver determinations and the agencies' waiver
decisions be made public. To ensure transparency in the firm-initiated
waiver request process, the agencies intend to make their decisions on
waiver requests public, although the information made public may not be
the complete response provided to a firm and would not include
confidential information. The agencies also note that under the final
rule they will be able to waive informational content requirements on
their joint initiative, and they could elect to exercise this
discretionary authority to waive informational content requirements for
similarly situated firms if they deem it appropriate to do so. However,
the final rule retains the agencies' ability to approve or deny waiver
requests at their joint discretion. The proposal's preamble included
clarifying examples of how the agencies expect to exercise this
discretion to approve waivers in appropriate circumstances, and these
examples also apply for the final rule. For example, a waiver may be
appropriate to reduce informational content that would be of limited
utility to the agencies, such as when the agencies have recently
completed an in-depth review of a particular business line and are
satisfied that they are in possession of current information relevant
to a firm's ability to resolve that business line. More specifically,
if the agencies have recently undertaken a comprehensive review of a
firm's Payments, Clearing, and Settlement (PCS) activities, it may be
appropriate to waive the requirement for that firm to submit
information relevant to these activities in its next resolution plan
submission. A waiver may also be appropriate for a firm that submitted
a tailored resolution plan under the 2011 rule and requests a waiver
that would limit the firm's required resolution plan content in a
manner that is similar to the tailored resolution plan provisions.
Additional circumstances may arise under the final rule where it is
appropriate to grant or deny waivers, and the agencies believe it is
therefore appropriate to maintain a flexible standard under the final
rule.
A covered company should provide all information necessary to
support its waiver request, including an explanation of why approval of
the request would be appropriate, why the information for which a
waiver is sought would not be relevant to the agencies' review of the
firm's resolution plan, and confirmation that the request meets the
eligibility requirements for a waiver under the final rule (i.e., that
it is not a core element, not related to an identified deficiency that
has not been adequately remedied, etc.). To ensure that the agencies
have the information necessary to evaluate a waiver request, the final
rule provides that covered companies would be required to explain why
the information sought to be waived would not be relevant to the
agencies' review of the covered company's next full resolution plan and
why a waiver of the requirement would be appropriate. Failure to
provide appropriate explanation or any information requested by the
agencies in a timely manner could lead the agencies to deny a waiver
request on the basis that insufficient explanation or a lack of
information makes it impossible to determine that the information
sought to be waived would not be relevant to their review of the
resolution plan. A full resolution plan should specify content omitted
due to a waiver request that was granted.
Two commenters suggested that the deadline for a waiver request to
be jointly denied by the agencies should be moved from nine months to
12 months prior to the submission deadline to better align with filers'
resolution plan preparation timelines. These commenters suggested that
the rule should provide for waiver requests to be submitted 15 months
prior to a full resolution plan submission date and allow the agencies
90 days within which to consider and act upon waiver requests, thereby
reducing the time period for agency review from six months to 90 days.
The agencies recognize that a firm may require more than nine
months to prepare a full resolution plan taking into account an
approved waiver request. Therefore, the final rule provides that a
waiver request is automatically denied on the date that is 12 months
prior to the submission date for the resolution plan to which it
related if the agencies do not jointly approve the waiver request prior
to that date. However, the agencies continue to believe that a minimum
of six months is the appropriate period for the agencies to review a
waiver request. Accordingly, the final rule requires a waiver request
to be submitted at least 18 months before the related resolution plan
submission date. If the agencies waive informational content
requirements for one or more firms on the agencies' own initiative, the
agencies will endeavor to provide those firms with notice of the waiver
at least 12 months before their next resolution plan submission date.
5. Targeted Resolution Plans
The proposal included a new type of resolution plan: A targeted
resolution plan. The agencies proposed the targeted resolution plan to
strike the appropriate balance between providing a means for the
agencies to continue receiving updated information on structural or
other changes that may impact a firm's resolution strategy while not
requiring submission of information that remains largely unchanged
since the previous submission. Under the proposed rule, the targeted
resolution plan would have been a subset of a full resolution plan and
would have included the following components: The information required
to be included in a full resolution plan regarding capital, liquidity,
and the covered company's plan for executing any recapitalization
contemplated in its resolution plan, including updated quantitative
financial information and analyses important to the execution of the
covered company's resolution strategy (i.e., the core elements); a
description of material changes since the covered company's previously
submitted resolution plan and changes the covered company has made to
its resolution plan in response; a description of changes in response
to firm-specific feedback provided by the agencies, general guidance
issued by the agencies, or legal or regulatory changes; a public
section; and information responsive to targeted areas of interest
identified by the agencies at least 12 months prior to the submission.
The agencies received several comments regarding the proposed
targeted resolution plan. One commenter asserted that the agencies
should further tailor the contents of the targeted resolution plan
based on firms' structures, business models, and activities in the
risk-based indicators and that the targeted resolution plan requirement
should apply differently to foreign filers subject to Category II or
III standards. Another commenter expressed concern that the targeted
resolution plan did not include
[[Page 59208]]
significant elements, such as booking and trading practices for
derivatives, trading exposure limits, and relationships with
counterparties, and that targeted resolution plans are untested.
Another commenter expressed concerns that the proposal's requirement
for biennial filers and triennial full filers to alternate between full
and targeted resolution plans would not be sufficient to capture
important information about resolvability given the speed with which
firms can change. Another commenter suggested that the agencies clarify
that targeted areas of interest identified by the agencies would not
require information that is wider in scope or depth than the
information required for a full resolution plan.
The agencies are finalizing the elements of the targeted resolution
plan as proposed, other than requiring a firm to affirm that no
material change has occurred, if applicable, and clarifying that a
targeted information request will be made in writing.\35\ Regarding the
request for further tailoring of the targeted resolution plan
requirement, the targeted resolution plan is already tailored to
capture the core elements and key informational content most critical
to helping ensure orderly resolution in bankruptcy, and to the extent
additional tailoring is needed, the agencies can provide it through
agency-initiated waivers and targeted information requests.
Accordingly, the agencies believe that the final rule will facilitate
appropriate tailoring of informational content requirements. The
agencies also note that they will continue to communicate their
tailored expectations for resolution plan content through firm-specific
feedback.
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\35\ The proposal's preamble included clarifying examples of how
the agencies expect firms to respond to the core elements
informational content requirement, and these examples also apply for
the final rule. For firms that have received general guidance from
the agencies applicable to their upcoming submissions regarding
capital, liquidity, and governance mechanisms, the targeted
resolution plans should address these elements consistent with that
general guidance. For example, a targeted resolution plan could
discuss changes to a firm's methodology for modeling liquidity needs
for its material entities during periods of financial stress, as
well as changes to the firm's means for providing capital and
liquidity to such entities as would be needed to successfully
execute the firm's resolution strategy. These updates could, for
example, involve changes to triggers upon which the firm relies to
execute a recapitalization, including triggers based on capital or
liquidity modeling. See, e.g., Guidance for Sec. 165(d) Resolution
Plan Submissions by Domestic Covered Companies, 84 FR 1438, 1449
(February 4, 2019); Guidance for 2018 Sec. 165(d) Annual Resolution
Plan Submissions By Foreign-based Covered Companies that Submitted
Resolution Plans in July 2015, https://www.federalreserve.gov/newsevents/pressreleases/files/bcreg20170324a21.pdf, https://www.fdic.gov/resauthority/2018subguidance.pdf. The firms that
received this general guidance would be expected to address
Resolution Capital Adequacy and Positioning (RCAP), Resolution
Liquidity Execution Need (RLEN), and governance mechanisms as part
of their updates concerning capital, liquidity, and any plans for
executing a recapitalization, respectively. A firm that has not
received general guidance is required to describe the capital and
liquidity needed to execute the firm's resolution strategy
consistent with Sec. __.5(c), (d)(1)(i), (iii), and (iv),
(e)(1)(ii), (e)(2), (3), and (5), (f)(1)(v), and (g) of the final
rule and, to the extent its resolution plan contemplates
recapitalization, the covered company's plan for executing the
recapitalization consistent with Sec. __.5(c)(5) of the final rule.
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Regarding commenters' concerns that the targeted resolution plan
does not include certain important elements, the agencies have found,
based on their experience reviewing resolution plans, that the
information that would be contained in the proposed targeted resolution
plan is the information that is most important to assessing firms'
resolvability, including the information that has the tendency to
change with the most frequency. While information about other topic
areas may be relevant to resolvability, the agencies believe it is
appropriate to receive this other information on a less frequent basis
through full resolution plan submissions. The agencies note that
targeted resolution plans must also address material changes.
Accordingly, a covered company that experiences material changes
relating to, for example, its booking and trading practices for
derivatives, trading exposure limits, relationships with
counterparties, or other activities or characteristics, would be
required to include such information in its targeted resolution plan.
In addition, the agencies have designed the targeted resolution plan to
ensure that they will receive important information that would allow
them to review and evaluate potential problem areas, including by
allowing the agencies to require firms to respond to targeted
information requests, while permitting less frequent submission of
information that may have a tendency to remain materially unchanged
over time. The agencies' ability to make targeted information requests,
require full resolution plan submissions and interim updates, move
resolution plan submission dates, and receive notices of extraordinary
events provides further means for the agencies to receive additional
information from these firms.
Regarding one commenter's request for clarification in relation to
the targeted information requests element of the targeted resolution
plan, consistent with the proposal, the agencies note that a targeted
resolution plan is a subset of a full resolution plan. Accordingly, the
information to be provided regarding areas of focus within a targeted
resolution plan would not require submission of information wider in
scope than what a full resolution plan requires.
The agencies may, however, request information in greater depth
than the firm chose to provide in prior submissions.
6. Reduced Resolution Plans
The proposal would have formalized the informational content
requirements for the reduced resolution plan. For foreign banking
organizations with relatively limited U.S. operations, the reduced
resolution plan components were proposed to include: A description of
(1) material changes experienced by the covered company since the
filing of the covered company's previously submitted resolution plan
and (2) changes to the strategic analysis that was presented in the
firm's previously submitted resolution plan resulting from material
changes, firm-specific feedback provided by the agencies, general
guidance issued by the agencies, or legal or regulatory changes.
Reduced resolution plans would also contain a public section. The
agencies noted that receiving updates of this information would permit
them to continue to monitor significant changes in a firm's structure
or activities while appropriately focusing the informational components
of these firms' resolution plans.
The agencies received several comments on the reduced resolution
plan. One commenter suggested that reduced resolution plans would not
provide the agencies sufficient information and that agencies may not
be able to assess whether a change is material as a result of triennial
reduced filers not filing full resolution plans after their initial
submissions. Another commenter suggested that firms that had previously
been resolution plan filers should not be required to submit a new full
resolution plan upon once again becoming a covered company and a new
triennial reduced filer. Another commenter suggested that the agencies
clarify when triennial reduced filers would be required to submit full
resolution plans under the final rule.
The agencies are finalizing the reduced resolution plan as
proposed, other than requiring an affirmation that no material change
has occurred, if applicable. Taking into account the relative degree of
risk posed by these firms, the agencies believe that the reduced
resolution plan as proposed generally would capture the information
necessary for the agencies to assess triennial reduced filers'
resolvability.
[[Page 59209]]
The material change requirement in the reduced resolution plan is
designed to capture important information relevant to the firm's
resolvability, its resolution strategy, and implementation of the
resolution strategy. In addition, and as discussed above, the final
rule has been revised from the proposal to require that a firm
affirmatively state in its resolution plan that no material change has
occurred since its prior resolution plan submission if the resolution
plan does not identify any material change. The agencies believe this
clarification will further help to ensure that firms give due attention
to the requirement to identify material changes. Finally, the agencies'
ability to require full resolution plan submissions and interim
updates, move resolution plan submission dates, and receive notices of
extraordinary events provides further means for the agencies to receive
additional information from triennial reduced filers.
The final rule also retains the requirement that any firm that was
not a covered company on the effective date of the final rule but
becomes a triennial reduced filer after the effective date of the final
rule submit a full resolution plan as its initial submission, even if
the firm was at some point previously subject to resolution planning
requirements (e.g., under the 2011 rule). There could be an extended
period of time between a firm's previous full resolution plan
submission and the time when it again becomes subject to the final
rule, rendering the earlier full resolution plan less relevant to the
firm's current operations, activities, and structure. The agencies
note, however, that a firm would be able to incorporate by reference
information from its prior resolution plan that meets the final rule's
standard for incorporation by reference. In addition, the agencies are
clarifying that full resolution plans filed under the 2011 rule by
firms that would continue to be covered companies under the final rule
and would be triennial reduced filers under the final rule would be
grandfathered for purposes of determining compliance with the
requirement that a triennial reduced filer's initial submission be a
full resolution plan. Accordingly, those firms would be required to
submit reduced resolution plans going forward but would not be required
to resubmit a new full resolution plan absent other relevant changes in
their circumstances (e.g., becoming subject to Category II or Category
III standards).
7. Tailored Resolution Plans
Under the 2011 rule, a tailored resolution plan was a means for
certain bank-centric firms to request that their resolution plan
submissions focus on nonbank activities that may pose challenges to
executing the firm's resolution strategy. Pursuant to the 2011 rule's
tailored resolution plan notice requirement, firms were required to
apply to the agencies to submit a tailored resolution plan rather than
a full resolution plan every year that a submission was required. The
agencies' proposal would have eliminated the tailored resolution plan
in light of the introduction of the firm-initiated waiver request
process and the targeted resolution plan as effective substitutes. The
agencies also noted in the proposal that many of the covered companies
that were eligible under the 2011 rule to file a tailored resolution
plan would no longer be subject to the resolution planning requirement
under the final rule or would become triennial reduced filers.
One commenter expressed concern regarding the proposal to eliminate
the tailored resolution plan. In particular, the commenter stated that
previous tailored resolution plan filers should be grandfathered so
that they would not need to apply for a waiver to continue to submit
similar submissions under the final rule. As an alternative, the
commenter proposed that the agencies limit the scope of these firms'
full and targeted resolution plan submissions to nonbank operations.
Another commenter asserted that the proposal should be modified to
allow for automatic waiver, upon request, from certain informational
content requirements for filers that qualified to submit tailored
resolution plans under the 2011 rule.
The agencies are finalizing the proposal to eliminate the tailored
resolution plan type. As explained in the proposal, the agencies expect
that the firm-initiated waiver request process and targeted resolution
plan requirements will be effective substitutes for the tailored
resolution plan and will allow the agencies to appropriately tailor
informational content requirements, taking into account the relative
mix of banking and non-banking activities for particular filers.
Accordingly, the agencies believe that it is unnecessary to retain the
tailored resolution plan in the final rule.
C. Critical Operations Methodology and Reconsideration Process
Under the final rule, and consistent with the 2011 rule, a critical
operation is an operation the failure or discontinuance of which would
pose a threat to the financial stability of the United States. The 2011
rule provides for critical operations to be identified by the firms or
at the agencies' joint direction. As part of their rule implementation
and supervision efforts, the agencies have developed a process and
methodology for jointly identifying critical operations and have made
certain critical operations identifications. In recognition that
financial markets and firms change over time, the agencies proposed
establishing a periodic, comprehensive review of critical operations
identifications by both the agencies and covered companies to ensure
that resolution planning reflects current operations and markets and
appropriately focuses on areas vital to financial stability.
1. Identification by Covered Companies and Methodology Requirement
Many covered companies have incorporated into their resolution
planning frameworks a procedure for identifying critical operations,
and the agencies proposed requiring biennial filers and triennial full
filers to maintain a process for identifying critical operations on a
scale that reflected the nature, size, complexity, and scope of their
operations. The proposal would have required this process for self-
identification to occur at least as frequently as a covered company's
resolution plan submission cycle and be documented in the covered
company's corporate governance policies and procedures. In addition,
the proposal would have established a process whereby firms that did
not currently have identified critical operations could request a
waiver from the requirement to maintain a self-identification process
and methodology. Firms that self-identified a critical operation would
have been required to notify the agencies if they ceased to identify an
operation as a critical operation. Finally, the agencies proposed a
conforming definitional change.\36\
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\36\ The agencies proposed including a new definition,
``identified critical operations,'' to clarify that critical
operations can be identified by either the covered company or
jointly identified by the agencies and that until such an operation
has been identified by either method, the operation does not need to
be addressed as a critical operation in a resolution plan.
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Two commenters suggested that the agencies clarify that the
requirement that firms have a process to self-identify critical
operations is presumptively waived for any covered company that has
previously submitted resolution plans and does not currently have an
identified critical operation. Finally, one commenter recommended
either eliminating or clarifying the use of the term ``economic
functions'' in the
[[Page 59210]]
agencies' description of a firm's methodology for identifying critical
operations.
Consistent with the proposal, under the final rule, biennial filers
and triennial full filers must establish and implement a process
designed to identify their critical operations. However, after July 1,
2022, the final rule also requires a triennial reduced filer that has
an identified critical operation to establish and implement a process
designed to identify its critical operations. As under the proposal, in
all cases, that process must contain a methodology and consider the
nature, size, complexity, and scope of the covered company's
operations.
Under the final rule, triennial reduced filers with identified
critical operations will be required to establish and implement a
process to identify critical operations, but only after they are
required to submit their next resolution plans in 2022. Where a firm
has an identified critical operation, it may be the case that it has
additional critical operations such that a periodic review by the firm
of its operations that is appropriate to the nature, size, complexity,
and scope of its operations could be beneficial. This timing will
provide the agencies the opportunity to complete their first joint
review of critical operations under the final rule and triennial
reduced filers with the opportunity to request reconsideration of any
currently identified critical operation in anticipation of their next
resolution plan submission.
Also consistent with the proposal, the final rule allows a covered
company that has previously submitted a resolution plan and does not
have an identified critical operation to request a waiver of the
requirement to have a process and methodology to identify its critical
operations if it does not have an identified critical operation as of
the date the waiver request is submitted.\37\ Under the proposal, the
covered company would have needed to apply for such a waiver at least
15 months before the submission date for that resolution plan, and
waivers would have been automatically granted on the date that was nine
months prior to the date that the resolution plan it relates to was due
if the agencies did not jointly deny the waiver prior to that date.
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\37\ The proposal's preamble included clarifying examples of why
a waiver may be appropriate, and these examples also apply for the
final rule. For example, for a covered company that has not
experienced any significant changes in its business, operations, or
organizational structure since its most recent resolution plan, a
waiver request that so states, with reasonable supporting detail,
could provide sufficient information for the agencies to evaluate
the request. Alternatively, if one of a covered company's operations
gained significant market share since it submitted its most recent
resolution plan submission, the waiver request should include this
information, a description of the operation, and a discussion of why
this change would not warrant the development of a methodology for
identifying critical operations.
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Consistent with the changes to the firm-initiated waiver request
process for informational content requirements, under the final rule, a
request for a waiver from the critical operations process and
methodology requirement will be automatically denied on a certain date
unless the agencies have jointly approved it before that date.
Requiring joint approval of waiver requests will be more consistent
with other provisions of the final rule that require joint agency
approval.
The agencies recognize that a firm may require more than nine
months to prepare a resolution plan taking into account any critical
operation the covered company newly identifies and, accordingly, a
covered company may need to complete its process more than nine months
before its next resolution plan is due. Therefore, the final rule
provides that a waiver request is automatically denied on the date that
is 12 months prior to the submission date for the resolution plan to
which it related if the agencies do not jointly approve the waiver
prior to that date. However, the agencies continue to believe that a
minimum of six months is the appropriate period for the agencies to
review a waiver request. Accordingly, the final rule requires a waiver
request to be submitted at least 18 months before the submission date.
This timing is consistent with the timing for firm-initiated waiver
requests of informational content requirements under the final rule.
However, to provide firms with an appropriate period to prepare a
waiver request after the agencies' adoption of the final rule with
respect to a resolution plan due on or before July 1, 2021, the final
rule provides that a waiver request must be submitted at least 17
months before that submission date.
The proposal would have required a covered company to submit a
waiver request with respect to each resolution plan submission. The
agencies recognize that a covered company that does not have an
identified critical operation and has been granted a waiver may not
experience any changes between resolution plan submissions that would
increase the likelihood of it having a critical operation. Accordingly,
to balance the benefits of covered companies engaging in a process to
identify their critical operations with the burden placed on covered
companies, the final rule provides that if a critical operations waiver
request is granted, the waiver will remain effective until the covered
company is required to submit its next full resolution plan. For
example, if a triennial full filer submits a waiver request in
connection with a full resolution plan that is due on or before July 1,
2024 and the request is approved, the waiver would be effective for the
July 1, 2024 full resolution plan submission and the firm's next
regularly scheduled targeted resolution plan due on or before July 1,
2027. To continue the effectiveness of the waiver, the covered company
would need to submit a new waiver request at least 18 months before its
next regularly scheduled full resolution plan due on or before July 1,
2030. Similarly, if a triennial full filer submits a waiver request in
connection with a targeted resolution plan and the request is granted,
the waiver would be effective for only that targeted resolution plan
and not its next full resolution plan.
The agencies recognize a foreign firm may not first determine the
category of standards to which it is subject (and, accordingly, whether
it is a triennial full filer or a triennial reduced filer) until after
the date by which a triennial full filer would need to submit a waiver
request with respect to its resolution plan due on or before July 1,
2021. Therefore, the final rule exempts each foreign triennial full
filer from the requirement to establish and implement a process and
methodology designed to identify their critical operations with respect
to its resolution plan due on or before July 1, 2021 if the foreign
firm does not have an identified critical operation as of the date by
which the waiver would have had to be submitted for this resolution
plan submission (i.e., 17 months before the resolution plan submission
date).
In addition, the agencies are clarifying the final rule by
eliminating usage of the term ``economic function,'' as suggested by
the commenter. However, consistent with the preamble to the proposed
rule, the agencies note that the types of operations that may be
critical operations include, but are not limited to, the core banking
functions of deposit taking; lending; payments, clearing and
settlement; custody; wholesale funding; and capital markets and
investment activities. In general, an operation is most likely to be a
critical operation of the firm where both (a) a market or activity
engaged in by the firm is significant to U.S. financial stability and
(b) the firm is a significant provider or participant in such a market
or activity. Factors relevant for determining whether a market or
activity is significant to U.S. financial stability, or
[[Page 59211]]
whether a firm is a significant provider or participant in such a
market or activity, may include substitutability, market concentration,
interconnectedness, and the impact of cessation. The firm's analysis
should focus on the significance of the activity to U.S. financial
stability, not whether a particular activity is significant for a
foreign parent or other foreign affiliates of the firm.\38\ The process
undertaken by a firm in completing such an analysis should be
commensurate with the nature, size, complexity, and scope of its
operations.\39\
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\38\ Where a firm's operation, such as U.S. dollar deposit
taking, is significant to the firm, but the failure or
discontinuance of that activity would not pose a threat to the
financial stability of the United States, that operation would not
be an identified critical operation under the final rule.
\39\ For a foreign firm, the critical operations identification
process and methodology should be commensurate with the nature,
size, complexity, and scope of its U.S. operations.
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2. Identification by Agencies and Requests for Reconsideration
Under the proposal, the agencies would have reviewed the operations
of covered companies at least every six years to determine whether any
new operations should be identified as critical or any prior
identifications should be rescinded. The proposal provided that, when
the agencies identified an operation as critical, the covered company
would have been required to treat the operation as an identified
critical operation in future resolution plans, unless the
identification occurred within six months of a firm's resolution plan
submission date. In addition, the proposal would have permitted a
covered company to request that the agencies reconsider a jointly made
critical operation identification. The agencies generally would have
been required to complete their assessment of the request within 90
days after receipt of the request, if the request were made at least
270 days before the firm's next resolution plan submission deadline.
Commenters were generally supportive of efforts to codify the
critical operations identification processes. Some commenters suggested
that the agencies modify the timeline for de-identification of a
critical operation identified by the agencies.\40\ A commenter also
suggested that the deadline for the agencies to be able to identify a
new critical operation be 12 months prior to a submission deadline,
instead of six months, as proposed.
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\40\ Specifically, the commenters suggested requiring a request
for de-identification to be filed no later than 15 months before the
next resolution plan submission is due; mandating that the agencies
make a decision within 90 days of receipt of the request; and
deeming the request approved if not denied by one year prior to the
resolution plan submission date.
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The agencies are adopting the proposed provisions related to the
identification of critical operations by the agencies with revisions
that address certain concerns raised by commenters.\41\ Consistent with
the proposal, the final rule permits the joint identification and
rescission of critical operations by the agencies at any time and the
agencies will review all identified critical operations and the
operations of firms for consideration as critical operations at least
every six years. The agencies recognize that a firm may require time to
revise its resolution plan to take into account a newly identified
critical operation. Therefore, consistent with commenters' feedback, a
covered company will be required to treat a critical operation as an
identified critical operation only if the joint identification is made
at least 12 months before the resolution plan submission date. The
agencies believe 12 months is a reasonable period for a firm to assess
the identified critical operation and adjust its resolution plan. To
align with this notice period, the agencies will endeavor to complete
their first joint review under the final rule of the operations of
covered companies at least 12 months prior to the 2021 resolution plan
submission date.
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\41\ The agencies are also adopting the proposed term,
``identified critical operations.''
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Finally, the agencies are adopting a modified process whereby firms
can request that the agencies reconsider a jointly identified critical
operation. Under the final rule, a firm may request reconsideration of
a jointly identified critical operation at any time. If a firm requests
reconsideration at least 18 months prior to its next resolution plan
submission date, the agencies will generally complete their review no
later than 12 months before that resolution plan submission date.
However, the agencies may request additional information, in which case
the agencies will complete their review no later than the later of (a)
90 days after the submission of all requested information and (b) 12
months before the resolution plan submission date. This generally
aligns the timing for requests for reconsideration with the timing
under the final rule for waiver requests of the requirement to
establish and implement a process designed to identify critical
operations and firm-initiated waiver requests of informational content
requirements.
The agencies retain discretion to defer consideration of a
reconsideration request submitted less than 18 months before a
resolution plan submission date until after the covered company's next
submission. If the agencies do not defer consideration of the
reconsideration request, the agencies intend to communicate with the
firm regarding the timing of the agencies' response. If the agencies
defer consideration of a request submitted less than 18 months before a
resolution plan submission date, the agencies will generally complete
their review no later than 12 months before the next resolution plan
submission date that follows that resolution plan submission date.
The agencies understand commenters' concerns regarding the de-
identification timeline, and have revised and lengthened the process to
provide covered companies with additional notice of new identifications
prior to a resolution plan submission date. However, the agencies
decline to adopt the commenters' request for an automatic rescission of
a critical operations identification if a request is submitted at least
15 months before the firm's next resolution plan is due and the
agencies have not acted within three months. A firm's initial request
for de-identification may be incomplete or unclear, and critical
operations identifications may raise complex issues that require
substantial time to consider. Accordingly, the agencies may require
more than 90 days to make an informed decision regarding whether an
operation should be de-identified. The agencies believe the final rule
adequately balances covered companies' need for certainty prior to a
resolution plan submission date with the need to carefully assess
critical operations identifications.
D. Clarifications to the 2011 Rule
1. Resolution Strategy for Foreign-based Covered Companies
The 2011 rule does not specify the assumptions a foreign banking
organization should make with respect to how resolution actions it
takes outside of the United States should be addressed in its
resolution plan. The proposal, consistent with general guidance that
the agencies have previously provided,\42\ would have
[[Page 59212]]
clarified that covered companies that are foreign banking organizations
should not assume that the covered company takes resolution actions
outside of the United States that would eliminate the need for any U.S.
subsidiaries to enter into resolution proceedings.
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\42\ See Guidance for 2018 Sec. 165(d) Annual Resolution Plan
Submissions By Foreign-based Covered Companies that Submitted
Resolution Plans in July 2015, https://www.federalreserve.gov/newsevents/pressreleases/files/bcreg20170324a21.pdf, p. 4, https://www.fdic.gov/resauthority/2018subguidance.pdf, p. 4 and https://www.federalreserve.gov/newsevents/pressreleases/bcreg20180129a.htm,
https://www.fdic.gov/news/news/press/2018/pr18006.html.
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One commenter asserted that the agencies should better align U.S.
resolution planning with home country resolution strategy by
recognizing the development of single point of entry strategies, total
loss absorbing capacity, and other improved resolvability measures
implemented by international banks. Although the agencies recognize
that foreign banking organizations may have home-country resolution
strategies under which U.S. entities are not planned to enter
resolution, the Dodd-Frank Act requires firms to plan for the failure
of their U.S. operations. General guidance and firm-specific feedback
have taken into account resolution plan resolvability improvements made
by foreign banking organizations. Accordingly, the final rule includes
this clarification as proposed.
2. Covered Company in Multi-Tier Foreign Banking Organization Holding
Companies
The definition of covered company in the 2011 rule includes the top
tier entity in a multi-tier holding company structure of any foreign
bank or company that is a bank holding company or is treated as a bank
holding company under section 8(a) of the International Banking Act of
1978. There is no benefit to the agencies in obtaining resolution plan
information relating to a top tier holding company that is, for
example, a government, sovereign entity, or family trust. The agencies
previously addressed this issue on a case-by-case basis and proposed
including a formal process in the proposal by which the agencies would
identify a subsidiary in a multi-tiered FBO holding company structure
to serve as the covered company that would be required to submit the
resolution plan. The agencies did not receive comment on this provision
and are adopting the clarification as proposed.
3. Removal of the Incompleteness Concept and Related Review
The 2011 rule includes a requirement that the agencies review a
resolution plan within 60 days of submission and jointly inform the
covered company if the resolution plan is informationally incomplete or
additional information is required to facilitate review of the
resolution plan. This process has not led to resubmissions in recent
years, and the proposal would have removed it. The agencies received
one comment in support of this provision, and the agencies are removing
the incompleteness concept and related review as proposed for the
reasons stated in the proposal.
4. Assessment of New Covered Companies
The 2011 rule provides that covered company status for a foreign
banking organization may be based on annual or quarterly reports,
depending on availability of such reports, but does not clarify whether
firms that file quarterly reports would be assessed for covered company
status on a quarterly or annual basis. The proposal would have
clarified that a foreign banking organization's status as a covered
company would be assessed quarterly for foreign banking organizations
that file the Federal Reserve's Form FR Y-7Q (FR Y-7Q) on a quarterly
basis and annually for foreign banking organizations that file the Y-7Q
on an annual basis only. In each case, the assessment would have been
based on total consolidated assets as averaged over the preceding four
calendar quarters as reported on the FR Y-7Q.
In addition, the proposal would also have addressed the process for
assessing a firm whose assets have grown due to a merger, acquisition,
combination, or similar transaction for covered company status. Under
these circumstances, the agencies would have the discretion to
alternatively consider, to the extent and in the manner the agencies
jointly consider appropriate, the relevant assets reflected on the one
or more of the four most recent reports of the pre-combination entities
(the FR Y-9C in the case of a U.S. firm and the FR Y-7Q in the case of
a foreign banking organization). The agencies did not receive comment
on these provisions and are adopting the clarifications as proposed.
5. Timing of New Filings, Firms That Change Filing Categories
To address the new filing cycles for biennial, triennial full, and
triennial reduced filers, the proposal included related modifications
to the timing of the initial submission for new filers. The proposal
also included a reservation of authority permitting the agencies to
require the initial resolution plan earlier than the date of the filing
group's next filing, so long as the submission deadline would have been
at least 12 months from the date on which the agencies jointly
determined to require the covered company to submit its resolution
plan. Similarly, the proposal specified the timing and type of
resolution plan a firm would be required to submit if it changed groups
(e.g., a triennial reduced filer becomes a triennial full filer or a
triennial full filer becomes a triennial reduced filer). The agencies
received no comments on these changes and are finalizing them as
proposed with technical changes to clarify that the relevant date for
these timing provisions is the date as of which the covered company
became a covered company or a member of a filing group.
6. Clarification of the Mapping Expectations for Foreign Banking
Organizations
The proposal would have amended the language governing the
expectations regarding the mapping of intragroup interconnections and
interdependencies by foreign banking organizations. The proposal also
would have clarified that foreign banking organizations would be
expected to map (a) the interconnections and interdependencies among
their U.S. subsidiaries, branches, and agencies, (b) the
interconnections and interdependencies between these U.S. entities and
any critical operations and core business lines, and (c) the
interconnections and interdependencies between these U.S. entities and
any foreign-based affiliates. The agencies did not receive comment on
these provisions and are adopting the clarifications regarding mapping
expectations for foreign banking organizations as proposed.
7. Standard of Review
In reviewing resolution plans, the agencies have identified
``deficiencies'' and ``shortcomings'' in resolution plans and have
issued firm-specific feedback letters to covered companies describing
the rationale for the findings and suggesting potential alternatives
for how the identified deficiencies and shortcomings could be
addressed. While the agencies have defined these terms in a public
statement,\43\ they are not defined in the 2011 rule. To provide an
opportunity for public comment on these terms and a clearer
articulation of the standards the agencies apply in identifying
deficiencies and shortcomings, the agencies proposed defining a
deficiency and a shortcoming. In addition, the agencies proposed
continuing to require a covered company that was assessed to have a
deficiency to submit a revised resolution plan to the agencies
addressing the deficiency within 90
[[Page 59213]]
days of receiving notice of the deficiency, consistent with the 2011
rule. The agencies received one comment in support of the proposal's
timeline for requiring a firm to respond to a notice of deficiency, and
the agencies are adopting the definitions of deficiency and
shortcoming, and the related standard of review, as proposed.
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\43\ Resolution Plan Assessment Framework and Firm
Determinations (2016), April 13, 2016, https://www.fdic.gov/news/news/press/2016/pr16031a.pdf.
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8. Deletion of ``Deficiencies'' Relating to Management Information
Systems
The 2011 rule requires a resolution plan to include information
about a covered company's management information systems, including a
description and analysis of the system's ``deficiencies, gaps or
weaknesses'' in the system's capabilities. The proposal would have
deleted the term ``deficiencies'' from this informational content
requirement solely to avoid confusion with the proposal's new
definition of ``deficiencies'' in the proposal, and not to change the
informational content requirement relating to a covered company's
management information systems. The agencies did not receive comment on
this provision and are adopting the clarification as proposed.
9. Incorporation by Reference
Similar to the 2011 rule, the proposal would have continued to
allow a covered company to incorporate by reference information from
its previously submitted resolution plans, subject to certain
restrictions. The proposal would have required the referenced
information to remain accurate in all respects that are material to the
covered company's resolution plan, and the incorporated information
would remain subject to the contemporaneous certification requirement.
The agencies intended that this clarification regarding the material
accuracy of referenced information provide covered companies greater
flexibility in their ability to incorporate by reference information,
thereby reducing duplication and further streamlining the resolution
planning process. One commenter supported this clarification and the
proposed expanded ability of firms to utilize incorporation by
reference, and the agencies are adopting the clarification as proposed.
E. Technical and Conforming Changes From the Proposal
In addition to the changes to the proposal described above, the
final rule includes technical and conforming changes for purposes of
clarity and consistency. For example, the final rule clarifies that
firms are required to submit a resolution plan on or before the
applicable submission date. The technical and conforming changes have
no substantive effect on the final rule as compared to the proposal.
F. Board Delegation of Authority
The Board has delegated to its Director of Supervision and
Regulation, or his or her delegatee, in consultation with the General
Counsel, or his or her delegatee, the authority to identify on behalf
of the Board a holding company in a multi-tiered holding company to
satisfy the requirements that apply to a covered company under the
final rule, to the extent such identification is consistent with the
criteria specified in the final rule and does not raise any significant
legal, policy, or supervisory concerns.
IV. Effective Date and Transition Period
The effective date of the final rule is [60 days after publication
in the Federal Register]. Financial institutions that are covered
companies under the final rule are required to comply with the final
rule beginning on the effective date.
The requirements for covered companies' initial resolution plans
under the final rule will be determined based on their categorization
under the tailoring rules on October 1, 2020, which is after the first
date foreign banking organizations are required to submit reports
including data for purposes of their categorization based on their
combined U.S. operations under the tailoring rules.\44\ In particular,
firms that are covered companies as of the effective date of the final
rule are required to submit their initial and subsequent resolution
plans under the final rule as follows:
---------------------------------------------------------------------------
\44\ Top-tier foreign banking organizations will report the FR
Y-15 on behalf of their U.S. intermediate holding company and
combined U.S. operations using data as of June 30, 2020.
---------------------------------------------------------------------------
Biennial filers (all firms subject to Category I standards):
Covered companies that are biennial filers on October 1, 2020 are
required to submit their next resolution plans on or before July 1,
2021, unless a firm changes its filing group before July 1, 2021. This
submission will be a targeted resolution plan. Thereafter, the biennial
filers will alternate between filing full and targeted resolution plans
on a biennial basis.
Triennial full filers (all firms subject to Category II or Category
III standards): Covered companies that are triennial full filers on
October 1, 2020 are required to submit targeted resolution plans on or
before July 1, 2021, unless a firm changes its filing group before July
1, 2021. The proposal would have required these firms to submit a full
resolution plan on or before July 1, 2021. The agencies recognize a
foreign firm may not first determine the category of standards to which
it is subject (and, accordingly, whether it is a triennial full filer
or a triennial reduced filer) until after the date by which a triennial
full filer would need to submit a firm-initiated waiver request of
informational content requirements for a full resolution plan due on or
before July 1, 2021. To provide clarity to covered companies during
this transition period, the final rule requires all triennial full
filers to submit a targeted resolution plan on or before July 1, 2021.
Thereafter, the triennial full filers will alternate between filing
full and targeted resolution plans on a triennial basis.
For firms with outstanding shortcomings or deficiencies, the
agencies' expectations regarding remediation and related timelines
established by the agencies continue to apply. For example, the four
foreign banking organizations that received firm-specific feedback
letters on December 20, 2018 (Barclays plc, Credit Suisse Group AG,
Deutsche Bank AG, and UBS Group AG) are expected to address their
shortcomings and complete their respective project plans by July 1,
2020, as provided in the agencies' firm-specific feedback letters.
Consistent with prior communications to these firms, they are required
to submit resolution plans on or before July 1, 2020 that may be
limited to describing changes that the firms have made to their July
2018 resolution plans to address shortcomings identified in those
resolution plans.\45\
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\45\ As the final rule makes clear, the requirement to submit a
resolution plan on or before July 1, 2020 does not affect the timing
or type of resolution plans required to be submitted as described
above. The applicable date for completion of the following
activities remains July 1, 2020: (i) The resolvability enhancement
initiatives identified in the agencies' 2018 firm-specific feedback
letters, and (ii) any additional enhancement initiatives identified
in the July 2018 resolution plan submission or in writing by firm
management during the 2018 resolution plan review. In connection
with their July 1, 2020 submissions, the firms should provide an
update concerning these initiatives.
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Likewise, consistent with previous communications to Northern Trust
Corporation, it is required to provide an interim update, as specified
in the agencies' joint March 29, 2019 firm-specific feedback letter,
concerning its projects to address the liquidity shortcoming identified
in its 2015 resolution plan.
Triennial reduced filers (all other filers): Covered companies that
are triennial reduced filers on October 1, 2020 must submit their
initial reduced resolution plans under the final rule on
[[Page 59214]]
or before July 1, 2022, unless a firm changes its filing group before
July 1, 2022. Thereafter, they are required to submit reduced
resolution plans on a triennial basis.
V. Impact Analysis
The final rule will modify the expected costs imposed by the 2011
rule while seeking to preserve the benefits to U.S. financial stability
provided by the 2011 rule. The economic effects of the final rule are
driven by the changes in the reporting costs related to resolution plan
submissions.
Consistent with EGRRCPA, the final rule changes the asset
thresholds at which all firms are required to file resolution plans
from $50 billion to $250 billion in total consolidated assets. The
final rule also requires the submission of resolution plans by certain
firms with $100 billion or more and less than $250 billion in total
consolidated assets, including those that have certain risk-based
indicators. As of March 31, 2019, firms with $50 billion or more and
less than $100 billion in total consolidated assets accounted for less
than 2 percent of total U.S. industry assets, and firms with $100
billion or more and less than $250 billion in total consolidated assets
accounted for 18 percent of total U.S. industry assets.\46\ The net
impact of these threshold changes would reduce the number of U.S.
filers from 23 to 12 and the number of foreign banking organization
filers from 86 to 62.\47\ This reduction in resolution plan filers
decreases costs as fewer firms would be required to prepare plans.
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\46\ Assets as reported on form FR Y-9C for the quarter ending
March 31, 2019.
\47\ Upon enactment of EGRRCPA on May 24, 2018, firms with total
consolidated assets of less than $100 billion were automatically no
longer subject to the resolution planning requirement, reducing the
number of U.S. filers and foreign banking organizations filers.
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The final rule also seeks to minimize the impact of this change on
benefits to U.S. financial stability provided from resolution plan
filings by maintaining filing requirements for certain firms with $100
billion or more and less than $250 billion in total consolidated
assets, including those that have certain risk-based indictors.
The final rule also reduces the frequency of required resolution
plan submissions for the remaining resolution plan filers, including
the largest and most complex resolution plan filers, by extending the
default filing cycle between resolution plan submissions. The final
rule modifies the filing cycle to every two years for the U.S. GSIBs
and certain systemically important nonbank financial companies and to
every three years for all other resolution plan filers. This change
formalizes a practice that has developed over time to extend firms'
resolution plan submission dates to allow at least two years between
resolution plan submissions and should reduce costs.
In the August 2018 proposal to extend mandatory Reporting
Requirements Associated with Regulation QQ, the estimate of total
annual burden for resolution plan filings was estimated to be 1,137,797
hours for 111 resolution plan filers.\48\ Since then, the number of
resolution plan filers has declined to 109, with a current total annual
burden of 1,066,086 hours.\49\ Under the final rule, the revised
estimated annual burden, incorporating proposed modifications to the
resolution plan rule, is 425,525 hours.\50\ At an estimated mean wage
of $56.05 per hour,\51\ this reduction in the estimated burden hours
has an estimated wage savings of approximately $35,903,444 per year.
Reductions in submission frequency and content could potentially reduce
the preparedness of covered companies to execute a rapid and orderly
resolution in the event of material financial distress or failure.
However, this potential economic effect would be ameliorated by the
agencies' authority to require a firm to submit a full resolution plan,
interim update, or alter resolution plan submission dates. This
authority would address circumstances where the agencies determine that
waiting for a firm to submit on its regular submission cycle could
present excess risk.
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\48\ Agency Information Collection Activities: Announcement of
Board Approval Under Delegated Authority and Submission to OMB, 83
FR 42296 (August 21, 2018).
\49\ As of March 31, 2019.
\50\ See Section VI.A. for estimated annual hourly burden
details.
\51\ Mean hourly wages retrieved from the Bureau of Labor and
Statistics (BLS), Occupational Employment and Wages May 2017,
published March 30, 2018 https://www.bls.gov/oes/2017/may/oes_nat.htm.
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Finally, the final rule is expected to improve efficiency by
streamlining the information requirements for the resolution plan
submissions: The final rule includes a mechanism for certain firms to
request a waiver from certain informational requirements in full
resolution plan submissions; introduces a new, more focused resolution
plan submission (i.e., targeted resolution plan); and formalizes the
conditions and content for reduced resolution plans. These resolution
plan modifications are appropriate because the firms' resolution plans
have matured and become more stable through multiple submissions.
Further, the resolution plan modifications should reduce the costs of
preparing and reviewing the resolution plans without having a material
impact on the benefits provided by the resolution plans.
In short, as detailed in this section, the proposal would provide
estimated wage savings, to the institutions affected by it, totaling
$35,903,444 due to the reduction of an estimated 640,561 burden hours
needed to comply with the final rule. Moreover, firms could reallocate
the estimated 640,561 hours used to comply with the final rule to other
activities considered to be more beneficial.\52\ Thus, the total
economic benefits of the proposal could be greater than the dollar
amount estimated.
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\52\ A commenter asserted that firms would likely eliminate (and
not repurpose) compliance jobs, resulting in cost savings to the
firms, and that these savings will likely only benefit the firms'
shareholders and executives. The agencies note that it is
speculative how firms will utilize resources no longer needed to
comply with the final rule.
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VI. Regulatory Analysis
A. Paperwork Reduction Act
Certain provisions of the final rule contain ``collections of
information'' within the meaning of the Paperwork Reduction Act of 1995
(44 U.S.C. 3501-3521) (PRA). In accordance with the requirements of the
PRA, the agencies may not conduct or sponsor, and a respondent is not
required to respond to, an information collection unless it displays a
currently valid Office of Management and Budget (OMB) control number.
The agencies reviewed the final rule and determined that it would
revise the reporting requirements that have been previously approved by
the Board under OMB control number 7100-0346 (Reporting Requirements
Associated with Regulation QQ; FR QQ). The Board's information
collection will be extended for three years, with revision.
Since the original rule was adopted in 2011, the Board's PRA
clearance has accounted for the entire burden associated with the rule
even though the Board and the Corporation are both legally authorized
to receive and review the Resolution Plans. The agencies have decided
to now equally account for the burden associated with this final rule.
As a result, the Corporation has submitted to OMB a request to
implement, for three years, an information collection in connection
with the final rule Resolution Plan submissions that accounts for half
of the estimated burden associated with the final rule.
The Corporation has submitted its request to OMB for review and
approval under section 3507(d) of the PRA (44 U.S.C. 3507(d)) and
section 1320.11 of
[[Page 59215]]
OMB's implementing regulations (5 CFR 1320). The Corporation submitted
the information collection requirements to OMB at the proposed rule
stage. OMB filed a comment assigning the Corporation OMB control number
3064-0210 and requested that the Corporation make a submission to OMB
after the proposed rule is finalized. The Board has reviewed the final
rule under the authority delegated to the Board by OMB. The agencies
did not receive any comments on the PRA.
Proposed Information Collection
Title of Information Collection: Reporting Requirements Associated
with Resolution Planning.
Agency Form Number: FR QQ.
OMB Control Number: 7100-0346.
Frequency of Response: Biennially, Triennially.
Respondents: Bank holding companies \53\ with assets of $250
billion or more, bank holding companies with $100 billion or more with
certain characteristics specified in the preamble, and nonbank
financial firms designated by the Council for supervision by the Board.
---------------------------------------------------------------------------
\53\ This includes any 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 meets the relevant total
consolidated assets threshold.
----------------------------------------------------------------------------------------------------------------
Number of Estimated Estimated
FR QQ respondents Annual average hours annual burden
\54\ frequency per response hours
----------------------------------------------------------------------------------------------------------------
Current 55
----------------------------------------------------------------------------------------------------------------
Reduced Reporters............................... 71 1 60 4,260
December Filers:
Tailored Reporters:
Domestic................................ 12 1 9,000 108,000
Foreign................................. 5 1 1,130 5,650
Full Reporters:
Domestic.................................... 3 1 26,000 78,000
Foreign..................................... 6 1 2,000 12,000
Complex Filers:
Domestic.................................... 8 1 \56\ 79,522 636,176
Foreign..................................... 4 1 55,500 222,000
---------------------------------------------------------------
Current Total........................... .............. .............. .............. 1,066,086
----------------------------------------------------------------------------------------------------------------
Final Rule
----------------------------------------------------------------------------------------------------------------
Triennial Reduced............................... 53 1 20 1,060
Triennial Full:
Complex Foreign............................. 4 1 13,135 52,540
Foreign and Domestic........................ 9 1 5,667 51,003
Biennial Filers:
Domestic.................................... 8 1 40,115 320,920
Waivers \57\.................................... 2 1 1 2
---------------------------------------------------------------
Proposed Total.............................. .............. .............. .............. 425,525
---------------------------------------------------------------
Change.................................. .............. .............. .............. -640,561
----------------------------------------------------------------------------------------------------------------
The agencies did not receive any comments on their proposed
revisions to this information collection. Accordingly, with the
exception of minor technical adjustments, the information collection
revisions are adopted as proposed in the proposal and replicated in the
chart above.
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\54\ Of these respondents, none are small entities as defined by
the Small Business Administration (i.e., entities with less than
$600 million in total assets) www.sba.gov/document/support-table-size-standards.
\55\ As of March 31, 2019.
\56\ This estimate captures the annual time that complex
domestic filers will spend complying with this collection, given
that these filers will only submit two resolution plans over the
three-year period covered by this notice. The estimate therefore
represents two-thirds of the time these firms are estimated to spend
on each resolution plan submission.
\57\ The agencies cannot reasonably estimate how many of the
firms that file resolution plans may submit waiver requests, nor how
long it would take to prepare a waiver request. Accordingly, the
agencies are including this line as a placeholder. To facilitate the
split of the burden between the agencies, this placeholder has been
adjusted to two estimated annual burden hours in the final rule.
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B. Regulatory Flexibility Act
The Regulatory Flexibility Act (RFA) generally requires that, in
connection with a final rulemaking, an agency prepare and make
available for public comment a final regulatory flexibility analysis
describing the impact of the proposed rule on small entities.\58\
However, a regulatory flexibility analysis is not required if the
agency certifies that the final rule will not have a significant
economic impact on a substantial number of small entities. The Small
Business Administration (SBA) has defined ``small entities'' to include
banking organizations with total assets of less than or equal to $600
million that are independently owned and operated or owned by a holding
company with less than or equal to $600 million in total assets.\59\
For the reasons described below and under section 605(b) of the RFA,
the agencies certify that the final rule will not have a significant
economic impact on a substantial number of small entities. As of March
31, 2019, there were 4,004
[[Page 59216]]
insured depository institutions and approximately 3,198 bank holding
companies that would fit the SBA's current definition of ``small
entity'' for purposes of the RFA.
---------------------------------------------------------------------------
\58\ 5 U.S.C. 601 et seq.
\59\ The SBA defines a small banking organization as having $600
million or less in assets, where an organization's ``assets are
determined by averaging the assets reported on its four quarterly
financial statements for the preceding year.'' See 13 CFR 121.201 as
amended by Small Business Size Standards: Adjustment of Monetary-
Based Size Standards for Inflation, 84 FR 34261 (July 18, 2019)
(effective August 19, 2019). In its determination, the ``SBA counts
the receipts, employees, or other measure of size of the concern
whose size is at issue and all of its domestic and foreign
affiliates.'' See 13 CFR 121.103. Following these regulations, the
agencies use a covered entity's affiliated and acquired assets,
averaged over the preceding four quarters, to determine whether the
covered entity is ``small'' for the purposes of RFA.
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As discussed in detail above, section 165(d) of the Dodd-Frank Act
requires certain financial companies to report periodically to the
agencies their plans for rapid and orderly resolution under the
Bankruptcy Code in the event of material financial distress or failure.
This provision of the Dodd-Frank Act was amended by EGRRCPA in 2018.
Specifically, EGRRCPA raised the $50 billion minimum asset threshold
for general application of the resolution planning requirement to $250
billion in total consolidated assets, and provided the Board with
discretion to apply the resolution planning requirement to firms with
$100 billion or more and less than $250 billion in total consolidated
assets. EGRRCPA also provides that any bank holding company, regardless
of asset size, that has been identified as a U.S. GSIB under the
Board's U.S. GSIB surcharge rule shall be considered a bank holding
company with $250 billion or more in total consolidated assets for
purposes of the application of the resolution planning requirement.
In accordance with section 165(d) of the Dodd-Frank Act as amended
by EGRRCPA, the Board is amending Regulation QQ \60\ and the
Corporation is amending part 381 \61\ to amend the requirement that a
covered company periodically submit a resolution plan to the Board and
Corporation.\62\ The final rule also modifies the procedures for joint
review of a resolution plan by the agencies. The reasons and
justification for the final rule are described in the preamble.
---------------------------------------------------------------------------
\60\ 12 CFR part 243.
\61\ 12 CFR part 381.
\62\ 12 U.S.C. 5365(d).
---------------------------------------------------------------------------
As discussed in the preamble, the final rule applies to covered
companies, which include only bank holding companies and foreign
banking organizations with at least $100 billion in total consolidated
assets, and nonbank financial companies that the Council has determined
under section 113 of the Dodd-Frank Act must be supervised by the Board
and for which such determination is in effect. The assets of a covered
company substantially exceed the $600 million asset threshold under
which a banking organization is considered a ``small entity'' under SBA
regulations.\63\
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\63\ The Dodd-Frank Act provides that the Board may, on the
recommendation of the Council, increase the asset threshold for the
application of the resolution planning requirements. 12 U.S.C.
5365(a)(2)(B). However, neither the Board nor the Council has the
authority to lower such threshold.
---------------------------------------------------------------------------
The final rule also applies to a nonbank financial company
designated by the Council for supervision by the Board under section
113 of the Dodd-Frank Act, regardless of such a company's asset size.
As of the date of the adoption of the final rule, there are no such
nonbank financial companies supervised by the Board. Although the asset
size of nonbank financial companies may not be the sole determinative
factor of whether such companies may pose systemic risks and would be
designated by the Council for supervision by the Board, it is one
consideration.\64\ It therefore may be unlikely that a financial firm
that is at or below the $600 million asset threshold would be
designated by the Council under section 113 of the Dodd-Frank Act.
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\64\ 12 CFR 1310.11.
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Because the final rule is not likely to apply to any company with
assets of $600 million or less, it is not expected to apply to any
small entity for purposes of the RFA. The agencies do not believe that
the final rule duplicates, overlaps, or conflicts with any other
Federal rules.
In light of the foregoing, the Board and the Corporation certify
that the final rule will not have a significant economic impact on a
substantial number of small entities supervised.
C. Riegle Community Development and Regulatory Improvement Act of 1994
Pursuant to section 302(a) of the Riegle Community Development and
Regulatory Improvement Act (RCDRIA),\65\ in determining the effective
date and administrative compliance requirements for new regulations
that impose additional reporting, disclosure, or other requirements on
insured depository institutions (IDIs), each Federal banking agency
must consider, consistent with principles of safety and soundness and
the public interest, any administrative burdens that such regulations
would place on depository institutions, including small depository
institutions, and customers of depository institutions, as well as the
benefits of such regulations. In addition, section 302(b) of RCDRIA
requires new regulations and amendments to regulations that impose
additional reporting, disclosures, or other new requirements on IDIs
generally to take effect on the first day of a calendar quarter that
begins on or after the date on which the regulations are published in
final form.\66\
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\65\ 12 U.S.C. 4802(a).
\66\ 12 U.S.C. 4802.
---------------------------------------------------------------------------
Because the final rule would not impose additional reporting,
disclosure, or other requirements on IDIs, section 302 of the RCDRIA
therefore does not apply.
D. Plain Language
Section 722 of the Gramm-Leach-Bliley Act \67\ requires the Federal
banking agencies to use plain language in all proposed and final rules
published after January 1, 2000. The agencies have sought to present
the final rule in a simple and straightforward manner, and did not
receive any comments on plain language.
---------------------------------------------------------------------------
\67\ 12 U.S.C. 4809(a).
---------------------------------------------------------------------------
E. The Congressional Review Act
For purposes of Congressional Review Act, the OMB makes a
determination as to whether a final rule constitutes a ``major''
rule.\68\ If a rule is deemed a ``major rule'' by the Office of
Management and Budget (OMB), the Congressional Review Act generally
provides that the rule may not take effect until at least 60 days
following its publication.\69\
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\68\ 5 U.S.C. 801 et seq.
\69\ 5 U.S.C. 801(a)(3).
---------------------------------------------------------------------------
The Congressional Review Act defines a ``major rule'' as any rule
that the Administrator of the Office of Information and Regulatory
Affairs of the OMB finds has resulted in or is likely to result in (A)
an annual effect on the economy of $100,000,000 or more; (B) a major
increase in costs or prices for consumers, individual industries,
Federal, State, or local government agencies or geographic regions, or
(C) significant adverse effects on competition, employment, investment,
productivity, innovation, or on the ability of United States-based
enterprises to compete with foreign-based enterprises in domestic and
export markets.\70\
---------------------------------------------------------------------------
\70\ 5 U.S.C. 804(2).
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The OMB has determined that the final rule is not a ``major rule''
within the meaning of the Congressional Review Act. As required by the
Congressional Review Act, the agencies will submit the final rule and
other appropriate reports to Congress and the Government Accountability
Office for review.
Text of the Common Rules
(All Agencies)
0
The text of the common rules appears below:
[[Page 59217]]
PART [ ]--RESOLUTION PLANS
Sec.
__.1 Authority and scope.
__.2 Definitions.
__.3 Critical operations.
__.4 Resolution plan required.
__.5 Informational content of a full resolution plan.
__.6 Informational content of a targeted resolution plan.
__.7 Informational content of a reduced resolution plan.
__.8 Review of resolution plans; resubmission of deficient
resolution plans.
__.9 Failure to cure deficiencies on resubmission of a resolution
plan.
__.10 Consultation.
__.11 No limiting effect or private right of action; confidentiality
of resolution plans.
__.12 Enforcement.
Sec. __.1 Authority and scope.
(a) Authority. This part is issued pursuant to section 165(d)(8) of
the Dodd-Frank Wall Street Reform and Consumer Protection Act (Pub. L.
111-203, 124 Stat. 1376, 1426-1427), as amended by the Economic Growth,
Regulatory Relief, and Consumer Protection Act (Pub. L. 115-174, 132
Stat. 1296) (the Dodd-Frank Act), 12 U.S.C. 5365(d)(8), which requires
the Board of Governors of the Federal Reserve System (Board) and the
Federal Deposit Insurance Corporation (Corporation) to jointly issue
rules implementing the provisions of section 165(d) of the Dodd-Frank
Act.
(b) Scope. This part applies to each covered company and
establishes rules and requirements regarding the submission and content
of a resolution plan, as well as procedures for review by the Board and
Corporation of a resolution plan.
Sec. __.2 Definitions.
For purposes of this part:
Bankruptcy Code means Title 11 of the United States Code.
Biennial filer is defined in Sec. __.4(a)(1).
Category II banking organization means a covered company that is a
category II banking organization pursuant to Sec. 252.5 of this title.
Category III banking organization means a covered company that is a
category III banking organization pursuant to Sec. 252.5 of this
title.
Company means a corporation, partnership, limited liability
company, depository institution, business trust, special purpose
entity, association, or similar organization, but does not include any
organization, the majority of the voting securities of which are owned
by the United States.
Control. A company controls another company when the first company,
directly or indirectly, owns, or holds with power to vote, 25 percent
or more of any class of the second company's outstanding voting
securities.
Core business lines means those business lines of the covered
company, including associated operations, services, functions and
support, that, in the view of the covered company, upon failure would
result in a material loss of revenue, profit, or franchise value.
Core elements mean the information required to be included in a
full resolution plan pursuant to Sec. __.5(c), (d)(1)(i), (iii), and
(iv), (e)(1)(ii), (e)(2), (3), and (5), (f)(1)(v), and (g) regarding
capital, liquidity, and the covered company's plan for executing any
recapitalization contemplated in its resolution plan, including updated
quantitative financial information and analyses important to the
execution of the covered company's resolution strategy.
Council means the Financial Stability Oversight Council established
by section 111 of the Dodd-Frank Act (12 U.S.C. 5321).
Covered company--(1) In general. A covered company means:
(i) Any nonbank financial company supervised by the Board;
(ii) Any global systemically important BHC;
(iii) Any bank holding company, as that term is defined in section
2 of the Bank Holding Company Act, as amended (12 U.S.C. 1841), and
part 225 of this title (the Board's Regulation Y), that has $250
billion or more in total consolidated assets, as determined based on
the average of the company's four most recent Consolidated Financial
Statements for Holding Companies as reported on the Federal Reserve's
Form FR Y-9C; provided that in the case of a company whose total
consolidated assets have increased as the result of a merger,
acquisition, combination, or similar transaction, the Board and the
Corporation may alternatively consider, in their discretion, to the
extent and in the manner the Board and the Corporation jointly consider
to be appropriate, one or more of the four most recent Consolidated
Financial Statements for Holding Companies as reported on the Federal
Reserve's Form FR Y-9C or Capital and Asset Reports for Foreign Banking
Organizations as reported on the Federal Reserve's Form FR Y-7Q of the
companies that were party to the merger, acquisition, combination or
similar transaction;
(iv) Any foreign bank or company that is a bank holding company or
is treated as a bank holding company under section 8(a) of the
International Banking Act of 1978 (12 U.S.C. 3106(a)), and that has
$250 billion or more in total consolidated assets, as determined
annually based on the foreign bank's or company's most recent annual
or, as applicable, quarterly based on the average of the foreign bank's
or company's four most recent quarterly Capital and Asset Reports for
Foreign Banking Organizations as reported on the Federal Reserve's Form
FR Y-7Q; provided that in the case of a company whose total
consolidated assets have increased as the result of a merger,
acquisition, combination, or similar transaction, the Board and the
Corporation may alternatively consider, in their discretion, to the
extent and in the manner the Board and the Corporation jointly consider
to be appropriate, one or more of the four most recent Consolidated
Financial Statements for Holding Companies as reported on the Federal
Reserve's Form FR Y-9C or Capital and Asset Reports for Foreign Banking
Organizations as reported on the Federal Reserve's Form FR Y-7Q of the
companies that were party to the merger, acquisition, combination or
similar transaction; and
(v) Any additional covered company as determined pursuant to Sec.
243.13.
(2) Cessation of covered company status for nonbank financial
companies supervised by the Board and global systemically important
BHCs. Once a covered company meets the requirements described in
paragraph (1)(i) or (ii) of this definition of covered company, the
company shall remain a covered company until it no longer meets any of
the requirements described in paragraph (1) of this definition of
covered company.
(3) Cessation of covered company status for other covered
companies. Once a company meets the requirements described in paragraph
(1)(iii) or (iv) of this definition of covered company, the company
shall remain a covered company until--
(i) In the case of a covered company described in paragraph
(1)(iii) of this definition of covered company or a covered company
described in paragraph (1)(iv) of this definition of covered company
that files quarterly Capital and Asset Reports for Foreign Banking
Organizations on the Federal Reserve's Form FR Y-7Q, the company has
reported total consolidated assets that are below $250 billion for each
of four consecutive quarters, as determined based on its total
consolidated assets as reported on each of its four most recent
Consolidated Financial Statements for Holding Companies on the Federal
Reserve's Form FR Y-9C or Capital and
[[Page 59218]]
Asset Reports for Foreign Banking Organizations on the Federal
Reserve's Form FR Y-7Q, as applicable; or
(ii) In the case of a covered company described in paragraph
(1)(iv) of this definition of covered company that does not file
quarterly Capital and Asset Reports for Foreign Banking Organizations
on the Federal Reserve's Form FR Y-7Q, the company has reported total
consolidated assets that are below $250 billion for each of two
consecutive years, as determined based on its total consolidated assets
as reported on each of its two most recent annual Capital and Asset
Reports for Foreign Banking Organizations on the Federal Reserve's Form
FR Y-7Q, or such earlier time as jointly determined by the Board and
the Corporation.
(4) Multi-tiered holding company. In a multi-tiered holding company
structure, covered company means the top-tier of the multi-tiered
holding company unless the Board and the Corporation jointly identify a
different holding company to satisfy the requirements that apply to the
covered company. In making this determination, the Board and the
Corporation shall consider:
(i) The ownership structure of the foreign banking organization,
including whether the foreign banking organization is owned or
controlled by a foreign government;
(ii) Whether the action would be consistent with the purposes of
this part; and
(iii) Any other factors that the Board and the Corporation
determine are relevant.
(5) Asset threshold for bank holding companies and foreign banking
organizations. The Board may, pursuant to a recommendation of the
Council, raise any asset threshold specified in paragraph (1)(iii) or
(iv) of this definition of covered company.
(6) Exclusion. A bridge financial company chartered pursuant to 12
U.S.C. 5390(h) shall not be deemed to be a covered company hereunder.
Critical operations means those operations of the covered company,
including associated services, functions and support, the failure or
discontinuance of which would pose a threat to the financial stability
of the United States.
Deficiency is defined in Sec. __.8(b).
Depository institution has the same meaning as in section 3(c)(1)
of the Federal Deposit Insurance Act (12 U.S.C. 1813(c)(1)) and
includes a state-licensed uninsured branch, agency, or commercial
lending subsidiary of a foreign bank.
Foreign banking organization means--
(1) A foreign bank, as defined in section 1(b)(7) of the
International Banking Act of 1978 (12 U.S.C. 3101(7)), that:
(i) Operates a branch, agency, or commercial lending company
subsidiary in the United States;
(ii) Controls a bank in the United States; or
(iii) Controls an Edge corporation acquired after March 5, 1987;
and
(2) Any company of which the foreign bank is a subsidiary.
Foreign-based covered company means any covered company that is not
incorporated or organized under the laws of the United States.
Full resolution plan means a full resolution plan described in
Sec. __.5.
Functionally regulated subsidiary has the same meaning as in
section 5(c)(5) of the Bank Holding Company Act, as amended (12 U.S.C.
1844(c)(5)).
Global systemically important BHC means a covered company that is a
global systemically important BHC pursuant to Sec. 252.5 of this
title.
Identified critical operations means the critical operations of the
covered company identified by the covered company or jointly identified
by the Board and the Corporation under Sec. __.3(b)(2).
Material change means an event, occurrence, change in conditions or
circumstances, or other change that results in, or could reasonably be
foreseen to have, a material effect on:
(1) The resolvability of the covered company;
(2) The covered company's resolution strategy; or
(3) How the covered company's resolution strategy is implemented.
Such changes include, but are not limited to:
(i) The identification of a new critical operation or core business
line;
(ii) The identification of a new material entity or the de-
identification of a material entity;
(iii) Significant increases or decreases in the business,
operations, or funding or interconnections of a material entity; or
(iv) Changes in the primary regulatory authorities of a material
entity or the covered company on a consolidated basis.
Material entity means a subsidiary or foreign office of the covered
company that is significant to the activities of an identified critical
operation or core business line, or is financially or operationally
significant to the resolution of the covered company.
Material financial distress with regard to a covered company means
that:
(1) The covered company has incurred, or is likely to incur, losses
that will deplete all or substantially all of its capital, and there is
no reasonable prospect for the company to avoid such depletion;
(2) The assets of the covered company are, or are likely to be,
less than its obligations to creditors and others; or
(3) The covered company is, or is likely to be, unable to pay its
obligations (other than those subject to a bona fide dispute) in the
normal course of business.
Nonbank financial company supervised by the Board means a nonbank
financial company or other company that the Council has determined
under section 113 of the Dodd-Frank Act (12 U.S.C. 5323) shall be
supervised by the Board and for which such determination is still in
effect.
Rapid and orderly resolution means a reorganization or liquidation
of the covered company (or, in the case of a covered company that is
incorporated or organized in a jurisdiction other than the United
States, the subsidiaries and operations of such foreign company that
are domiciled in the United States) under the Bankruptcy Code that can
be accomplished within a reasonable period of time and in a manner that
substantially mitigates the risk that the failure of the covered
company would have serious adverse effects on financial stability in
the United States.
Reduced resolution plan means a reduced resolution plan described
in Sec. __.7.
Shortcoming is defined in Sec. __.8(e).
Subsidiary means a company that is controlled by another company,
and an indirect subsidiary is a company that is controlled by a
subsidiary of a company.
Targeted resolution plan means a targeted resolution plan described
in Sec. __.6.
Triennial full filer is defined in Sec. __.4(b)(1).
Triennial reduced filer is defined in Sec. __.4(c)(1).
United States means the United States and includes any state of the
United States, the District of Columbia, any territory of the United
States, Puerto Rico, Guam, American Samoa, and the Virgin Islands.
Sec. __.3 Critical operations.
(a) Identification of critical operations by covered companies--(1)
Process and methodology required. (i) Each biennial filer and triennial
full filer shall establish and implement a process designed to identify
each of its critical operations. After July 1, 2022, each triennial
reduced filer that has any identified critical operation shall
establish and implement a process
[[Page 59219]]
designed to identify each of its critical operations. The scale of the
process must be appropriate to the nature, size, complexity, and scope
of the covered company's operations. The covered company must review
its process periodically and update it as necessary to ensure its
continued effectiveness. The covered company shall describe its process
and how it is applied as part of its corporate governance relating to
resolution planning under Sec. __.5(d)(1). The covered company must
conduct the process described in this paragraph (a)(1) sufficiently in
advance of its next resolution plan submission so that the covered
company is prepared to submit the information required under Sec. Sec.
__.5 through __.7 for each identified critical operation.
(ii) The process required under paragraph (a)(1)(i) of this section
must include a methodology for evaluating the covered company's
participation in activities and markets that may be critical to the
financial stability of the United States. The methodology must be
designed, taking into account the nature, size, complexity, and scope
of the covered company's operations, to identify and assess:
(A) The markets and activities in which the covered company
participates or has operations;
(B) The significance of those markets and activities with respect
to the financial stability of the United States; and
(C) The significance of the covered company as a provider or other
participant in those markets and activities.
(2) Waiver requests. A covered company that has previously
submitted a resolution plan under this part may request a waiver of the
requirement to have a process and methodology under paragraph (a)(1) of
this section by submitting a waiver request in accordance with this
paragraph (a)(2) if the covered company does not have an identified
critical operation as of the date it submits the waiver request.
(i) Each waiver request shall be divided into a public section and
a confidential section. A covered company shall segregate and
separately identify the public section from the confidential section. A
covered company shall include in the confidential section of a waiver
request its rationale for why a waiver of the requirement would be
appropriate, including an explanation of why the process and
methodology are not likely to identify any critical operation given its
business model, operations, and organizational structure. A covered
company shall describe in the public section of a waiver request that
it is seeking to waive the requirement.
(ii) Any waiver request must be made in writing no later than 18
months before the date by which the covered company is required to
submit its next resolution plan. Notwithstanding the foregoing, with
respect to any resolution plan that a covered company is required to
submit on or before July 1, 2021, any waiver request must be made in
writing no later than 17 months before that date.
(iii) The Board and Corporation may jointly approve or deny a
waiver request in their discretion. Unless the Board and the
Corporation have jointly approved a waiver request, the waiver request
will be deemed denied on the date that is 12 months before the date by
which the covered company is required to submit the resolution plan
that immediately follows submission of the waiver request.
(iv) An approved waiver request under this paragraph (a)(2) is
effective for the resolution plan submission that immediately follows
submission of the waiver request and for any resolution plan submitted
thereafter until, but not including, the covered company's next full
resolution plan submission.
(3) Limited exemption. A foreign-based covered company is exempt
from the requirement to have a process and methodology under paragraph
(a)(1) of this section in connection with any requirement to submit a
resolution plan on or before July 1, 2021 if the foreign-based covered
company does not have an identified critical operation as of the date
that is 17 months before the date by which the covered company is
required to submit the resolution plan.
(b) Joint identification of critical operations by the Board and
the Corporation. (1) The Board and the Corporation shall, not less
frequently than every six years, jointly review the operations of
covered companies to determine whether to jointly identify critical
operations of any covered company in accordance with paragraph (b)(2)
of this section, or to jointly rescind any currently effective joint
identification in accordance with paragraph (b)(3) of this section.
(2) If the Board and the Corporation jointly identify a covered
company's operation as a critical operation, the Board and the
Corporation shall jointly notify the covered company in writing. A
covered company is not required to include the information required
under Sec. Sec. __.5 through __.7 for the identified critical
operation in any resolution plan that the covered company is required
to submit within 12 months after the joint notification unless the
operation had been identified by the covered company as a critical
operation on or before the date the Board and the Corporation jointly
notified the covered company.
(3) The Board and the Corporation may jointly rescind a joint
identification under paragraph (b)(2) of this section by providing the
covered company with joint notice of the rescission. Upon the
notification, the covered company is not required to include the
information regarding the operation required for identified critical
operations under Sec. Sec. __.5 through __.7 in any subsequent
resolution plan unless:
(i) The covered company identifies the operation as a critical
operation; or
(ii) The Board and the Corporation subsequently provide a joint
notification under paragraph (b)(2) of this section to the covered
company regarding the operation.
(4) A joint notification provided by the Board and the Corporation
to a covered company before [effective date of final rule] that
identifies any of its operations as a critical operation and not
previously jointly rescinded is deemed to be a joint identification
under paragraph (b)(2) of this section.
(c) Request for reconsideration of jointly identified critical
operations. A covered company may request that the Board and the
Corporation reconsider a joint identification under paragraph (b)(2) of
this section in accordance with this paragraph (c).
(1) Written request for reconsideration. The covered company must
submit a written request for reconsideration to the Board and the
Corporation that includes a clear and complete statement of all
arguments and all relevant, material information that the covered
company expects to have considered. If a covered company has previously
requested reconsideration regarding the operation, the written request
must also describe the material differences between the new request and
the most recent prior request.
(2) Timing. (i) If a covered company submits a request for
reconsideration on or before the date that is 18 months before the date
by which it is required to submit its next resolution plan, the Board
and the Corporation will complete their reconsideration no later than
12 months before the date by which the covered company is required to
submit its next resolution plan. Notwithstanding the foregoing, if the
Board and the Corporation jointly find that additional information from
the covered company is required to complete their reconsideration, the
Board and the Corporation will jointly request in writing the
additional information from the covered company.
[[Page 59220]]
The Board and the Corporation will then complete their reconsideration
no later than the later of:
(A) Ninety (90) days after receipt of all additional information
from the covered company; and
(B) Twelve (12) months before the date by which the covered company
is required to submit its next resolution plan.
(ii) If a covered company submits a request for reconsideration
less than 18 months before the date by which it is required to submit
its next resolution plan, the Board and the Corporation may, in their
discretion, defer reconsideration of the joint identification until
after the submission of that resolution plan, with the result that the
covered company must include the identified critical operation in that
resolution plan and the Board and the Corporation will complete their
reconsideration in accordance with paragraph (c)(2)(i) of this section
as though the covered company had submitted the request after the date
by which the covered company is required to submit that resolution
plan.
(3) Joint communication following reconsideration. The Board and
the Corporation will communicate jointly the results of their
reconsideration in writing to the covered company.
(d) De-identification by covered company of self-identified
critical operations. A covered company may cease to include in its
resolution plans the information required under Sec. Sec. __.5 through
__.7 regarding an operation previously identified only by the covered
company (and not also jointly by the Board and the Corporation) as a
critical operation only in accordance with this paragraph (d).
(1) Notice of de-identification. If a covered company ceases to
identify an operation as a critical operation, the covered company must
notify the Board and the Corporation of its de-identification. The
notice must be in writing and include a clear and complete explanation
of:
(i) Why the covered company previously identified the operation as
a critical operation; and
(ii) Why the covered company no longer identifies the operation as
a critical operation.
(2) Timing. Notwithstanding a covered company's de-identification,
and unless otherwise notified in writing jointly by the Board and the
Corporation, a covered company shall include the applicable information
required under Sec. Sec. __.5 through Sec. __.7 regarding an
operation previously identified by the covered company as a critical
operation in any resolution plan the covered company is required to
submit during the period ending 12 months after the covered company
notifies the Board and the Corporation in accordance with paragraph
(d)(1) of this section.
(3) No effect on joint identifications. Neither a covered company's
de-identification nor notice thereof under paragraph (d)(1) of this
section rescinds a joint identification made by the Board and the
Corporation under paragraph (b)(2) of this section.
Sec. __.4 Resolution plan required.
(a) Biennial filers--(1) Group members. Biennial filer means:
(i) Any global systemically important BHC; and
(ii) Any nonbank financial company supervised by the Board that has
not been jointly designated a triennial full filer by the Board and
Corporation under paragraph (a)(2) of this section or that has been
jointly re-designated a biennial filer by the Board and the Corporation
under paragraph (a)(2) of this section.
(2) Nonbank financial companies. The Board and the Corporation may
jointly designate a nonbank financial company supervised by the Board
as a triennial full filer in their discretion, taking into account
facts and circumstances that each of the Board and the Corporation in
its discretion determines to be relevant. The Board and the Corporation
may in their discretion jointly re-designate as a biennial filer a
nonbank financial company that the Board and the Corporation had
previously designated as a triennial filer, taking into account facts
and circumstances that each of the Board and the Corporation in its
discretion determines to be relevant.
(3) Frequency of submission. Biennial filers shall each submit a
resolution plan to the Board and the Corporation every two years.
(4) Submission date. Biennial filers shall submit their resolution
plans on or before July 1 of each year in which a resolution plan is
due.
(5) Type of resolution plan required to be submitted. Biennial
filers shall alternate submitting a full resolution plan and a targeted
resolution plan.
(6) New covered companies that are biennial filers. A company that
becomes a covered company and a biennial filer after [effective date of
final rule] shall submit a full resolution plan on or before the next
date by which the other biennial filers are required to submit
resolution plans pursuant to paragraph (a)(4) of this section that
occurs no earlier than 12 months after the date as of which the company
became a covered company. The company's subsequent resolution plans
shall be of the type required to be submitted by the other biennial
filers.
(b) Triennial full filers--(1) Group members. Triennial full filer
means:
(i) Any category II banking organization;
(ii) Any category III banking organization; and
(iii) Any nonbank financial company supervised by the Board that is
jointly designated a triennial full filer by the Board and Corporation
under paragraph (a)(2) of this section.
(2) Frequency of submission. Triennial full filers shall each
submit a resolution plan to the Board and the Corporation every three
years.
(3) Submission date. Triennial full filers shall submit their
resolution plans on or before July 1 of each year in which a resolution
plan is due.
(4) Type of resolution plan required to be submitted. Triennial
full filers shall alternate submitting a full resolution plan and a
targeted resolution plan.
(5) New covered companies that are triennial full filers. A company
that becomes a covered company and a triennial full filer after
[effective date of final rule] shall submit a full resolution plan on
or before the next date by which the other triennial full filers are
required to submit resolution plans pursuant to paragraph (b)(3) of
this section that occurs no earlier than 12 months after the date as of
which the company became a covered company. The company's subsequent
resolution plans shall be of the type required to be submitted by the
other triennial full filers.
(c) Triennial reduced filers--(1) Group members. Triennial reduced
filer means any covered company that is not a global systemically
important BHC, nonbank financial company supervised by the Board,
category II banking organization, or category III banking organization.
(2) Frequency of submission. Triennial reduced filers shall each
submit a resolution plan to the Board and the Corporation every three
years.
(3) Submission date. Triennial reduced filers shall submit their
resolution plans on or before July 1 of each year in which a resolution
plan is due.
(4) Type of resolution plan required to be submitted. Triennial
reduced filers shall submit a reduced resolution plan.
(5) New covered companies that are triennial reduced filers. A
company that becomes a covered company and a triennial reduced filer
after December 31, 2019 shall submit a full resolution plan on or
before the next date by which
[[Page 59221]]
the other triennial reduced filers are required to submit resolution
plans pursuant to paragraph (c)(3) of this section that occurs no
earlier than 12 months after the date as of which the company became a
covered company. The company's subsequent resolution plans shall be
reduced resolution plans.
(d) General--(1) Changing filing groups. If a covered company that
is a member of a filing group specified in paragraphs (a) through (c)
of this section (``original group filer'') becomes a member of a
different filing group specified in paragraphs (a) through (c) of this
section (``new group filer''), then the covered company shall submit
its next resolution plan as follows:
(i) If the next date by which the original group filers are
required to submit their next resolution plans is the same date by
which the other new group filers are required to submit their next
resolution plans and:
(A) That date is less than 12 months after the date as of which the
covered company became a new group filer, the covered company shall
submit its next resolution plan on or before that date. The resolution
plan may be the type of resolution plan that the original group filers
are required to submit on or before that date or the type of resolution
plan that the other new group filers are required to submit on or
before that date.
(B) That date is 12 months or more after the date as of which the
covered company became a new group filer, the covered company shall
submit on or before that date the type of resolution plan the other new
group filers are required to submit on or before that date.
(ii) If the next date by which the original group filers are
required to submit their next resolution plans is different from the
date by which the new group filers are required to submit their next
resolution plans, the covered company shall submit its next resolution
plan on or before the next date by which the other new group filers are
required to submit a resolution plan that occurs no earlier than 12
months after the date as of which the covered company became a new
group filer. The covered company shall submit the type of resolution
plan that the other new group filers are required to submit on or
before the date the covered company is required to submit its next
resolution plan.
(iii) Notwithstanding paragraph (d)(1)(i) or (ii) of this section,
any triennial reduced filer that becomes a biennial filer or a
triennial full filer shall submit a full resolution plan on or before
the next date by which the other new group filers are required to
submit their next resolution plans that occurs no earlier than 12
months after the date as of which the covered company became a new
group filer. After submitting a full resolution plan, the covered
company shall submit, on or before the next date that the other new
group filers are required to submit their next resolution plans, the
type of resolution plan the other new group filers are required to
submit on or before that date.
(2) Altering submission dates. Notwithstanding anything to the
contrary in this part, the Board and Corporation may jointly determine
that a covered company shall submit its resolution plan on or before a
date other than as provided in paragraphs (a) through (c) or paragraph
(d)(1) of this section. The Board and the Corporation shall provide a
covered company with written notice of a determination under this
paragraph (d)(2) no later than 12 months before the date by which the
covered company is required to submit the resolution plan.
(3) Authority to require interim updates. The Board and the
Corporation may jointly require that a covered company submit an update
to a resolution plan submitted under this part, within a reasonable
amount of time, as jointly determined by the Board and Corporation. The
Board and the Corporation shall notify the covered company of its
requirement to submit an update under this paragraph (d)(3) in writing,
and shall specify the portions or aspects of the resolution plan the
covered company shall update.
(4) Notice of extraordinary events--(i) In general. Each covered
company shall provide the Board and the Corporation with a notice no
later than 45 days after any material merger, acquisition of assets, or
similar transaction or fundamental change to the covered company's
resolution strategy. Such notice must describe the event and explain
how the event affects the resolvability of the covered company. The
covered company shall address any event with respect to which it has
provided notice pursuant to this paragraph (d)(4)(i) in the following
resolution plan submitted by the covered company.
(ii) Exception. A covered company shall not be required to submit a
notice under paragraph (d)(4)(i) of this section if the date by which
the covered company would be required to submit the notice under
paragraph (d)(4)(i) of this section would be within 90 days before the
date by which the covered company is required to submit a resolution
plan under this section.
(5) Authority to require a full resolution plan submission.
Notwithstanding anything to the contrary in this part, the Board and
Corporation may jointly require a covered company to submit a full
resolution plan instead of a targeted resolution plan or a reduced
resolution plan that the covered company is otherwise required to
submit under this section. The Board and the Corporation shall provide
a covered company with written notice of a determination under this
paragraph (d)(5) no later than 12 months before the date by which the
covered company is required to submit the full resolution plan. The
date on or before which a full resolution plan must be submitted under
this paragraph (d)(5) will be the date by which the covered company
would otherwise be required to submit its upcoming targeted resolution
plan or reduced resolution plan under paragraphs (a) through (c), or
(d)(1) or (2) of this section. The requirement to submit a full
resolution plan under this paragraph (d)(5) does not alter the type of
resolution plan the covered company will subsequently be required to
submit under this section.
(6) Waivers--(i) Authority to waive requirements. The Board and the
Corporation may jointly waive one or more of the resolution plan
requirements of Sec. __.5, Sec. __.6, or Sec. __.7 for one or more
covered companies for any number of resolution plan submissions. A
request pursuant to paragraph (d)(6)(ii) of this section is not
required for the Board and Corporation to exercise their authority
under this paragraph (d)(6)(i).
(ii) Waiver requests by covered companies. In connection with the
submission of a full resolution plan, a triennial full filer or
triennial reduced filer that has previously submitted a resolution plan
under this part may request a waiver of one or more of the
informational content requirements of Sec. __.5 in accordance with
this paragraph (d)(6)(ii).
(A) A requirement to include any of the following information is
not eligible for a waiver at the request of a triennial full filer or
triennial reduced filer:
(1) Information specified in section 165(d)(1)(A) through (C) of
the Dodd-Frank Act (12 U.S.C. 5365(d)(1)(A) through (C));
(2) Any core element;
(3) Information required to be included in the public section of a
full resolution plan under Sec. __.11(c)(2);
(4) Information about the remediation of any previously identified
deficiency or shortcoming unless the Board and the Corporation have
jointly determined that the triennial full filer or triennial
[[Page 59222]]
reduced filer has satisfactorily remedied the deficiency or addressed
the shortcoming before its submission of the waiver request; or
(5) Information about changes to the triennial full filer or
triennial reduced filer's last submitted resolution plan resulting from
any:
(i) Change in law or regulation;
(ii) Guidance or feedback from the Board and the Corporation; or
(iii) Any material change experienced by the triennial full filer
or triennial reduced filer since it submitted that resolution plan.
(B) Each waiver request shall be divided into a public section and
a confidential section. A triennial full filer or triennial reduced
filer shall segregate and separately identify the public section from
the confidential section.
(1) The triennial full filer or triennial reduced filer shall
include in the confidential section of a waiver request a clear and
complete explanation of why:
(i) Each requirement sought to be waived is not a requirement
described in paragraph (d)(6)(ii)(A) of this section;
(ii) The information sought to be waived would not be relevant to
the Board's and Corporation's review of the triennial full filer or
triennial reduced filer's next full resolution plan; and
(iii) A waiver of each requirement would be appropriate.
(2) The triennial full filer or triennial reduced filer shall
include in the public section of a waiver request a list of the
requirements that it is requesting be waived.
(C) A triennial full filer or triennial reduced filer may not make
more than one waiver request for any full resolution plan submission
and any waiver request must be made in writing no later than 18 months
before the date by which the triennial full filer or triennial reduced
filer is required to submit the full resolution plan.
(D) The Board and Corporation may jointly approve or deny a waiver
request, in whole or in part, in their discretion. Unless the Board and
the Corporation have jointly approved a waiver request, the waiver
request will be deemed denied on the date that is 12 months before the
date by which the triennial full filer or triennial reduced filer is
required to submit the full resolution plan to which the waiver request
relates.
(E) An approved waiver request under this paragraph (d)(6)(ii) is
effective for only the full resolution plan that immediately follows
submission of the waiver request.
(e) Access to information. In order to allow evaluation of a
resolution plan, each covered company must provide the Board and the
Corporation such information and access to personnel of the covered
company as the Board and the Corporation jointly determine during the
period for reviewing the resolution plan is necessary to assess the
credibility of the resolution plan and the ability of the covered
company to implement the resolution plan. In order to facilitate review
of any waiver request by a covered company under Sec. __.3(a)(2) or
paragraph (d)(6)(ii) of this section, or any joint identification of a
critical operation of a covered company under Sec. __.3(b), each
covered company must provide such information and access to personnel
of the covered company as the Board and the Corporation jointly
determine is necessary to evaluate the waiver request or whether the
operation is a critical operation. The Board and the Corporation will
rely to the fullest extent possible on examinations conducted by or on
behalf of the appropriate Federal banking agency for the relevant
company.
(f) Board of directors approval of resolution plan. Before
submission of a resolution plan under paragraphs (a) through (c) of
this section, the resolution plan of a covered company shall be
approved by:
(1) The board of directors of the covered company and noted in the
minutes; or
(2) In the case of a foreign-based covered company only, a delegee
acting under the express authority of the board of directors of the
covered company to approve the resolution plan.
(g) Resolution plans provided to the Council. The Board shall make
the resolution plans and updates submitted by the covered company
pursuant to this section available to the Council upon request.
(h) Required and prohibited assumptions. In preparing its
resolution plan, a covered company shall:
(1) Take into account that the material financial distress or
failure of the covered company may occur under the severely adverse
economic conditions provided to the covered company by the Board
pursuant to 12 U.S.C. 5365(i)(1)(B);
(2) Not rely on the provision of extraordinary support by the
United States or any other government to the covered company or its
subsidiaries to prevent the failure of the covered company, including
any resolution actions taken outside the United States that would
eliminate the need for any of a covered company's U.S. subsidiaries to
enter into resolution proceedings; and
(3) With respect to foreign banking organizations, not assume that
the covered company takes resolution actions outside of the United
States that would eliminate the need for any U.S. subsidiaries to enter
into resolution proceedings.
(i) Point of contact. Each covered company shall identify a senior
management official at the covered company responsible for serving as a
point of contact regarding the resolution plan of the covered company.
(j) Incorporation of previously submitted resolution plan
information by reference. Any resolution plan submitted by a covered
company may incorporate by reference information from a resolution plan
previously submitted by the covered company to the Board and the
Corporation, provided that:
(1) The resolution plan seeking to incorporate information by
reference clearly indicates:
(i) The information the covered company is incorporating by
reference; and
(ii) Which of the covered company's previously submitted resolution
plan(s) originally contained the information the covered company is
incorporating by reference and the specific location of the information
in the covered company's previously submitted resolution plan; and
(2) The covered company certifies that the information the covered
company is incorporating by reference remains accurate in all respects
that are material to the covered company's resolution plan.
(k) Initial resolution plans after effective date. (1)
Notwithstanding anything to the contrary in paragraphs (a) through (c)
or (d)(1) of this section, each company that is a covered company as of
December 31, 2019 is required to submit its initial resolution plan
after December 31, 2019, as provided in this paragraph (k). The
submission date and resolution plan type for each subsequent resolution
plan will be determined pursuant to paragraphs (a) through (d) of this
section.
(i) Biennial filers. Each covered company that is a biennial filer
on October 1, 2020 and remains a biennial filer as of July 1, 2021, is
required to submit a targeted resolution plan pursuant to paragraph
(a)(4) of this section on or before July 1, 2021.
(ii) Triennial full filers. Each covered company that is a
triennial full filer on October 1, 2020 and remains a triennial full
filer as of July 1, 2021 is required
[[Page 59223]]
to submit a targeted resolution plan pursuant to paragraph (b)(3) of
this section on or before July 1, 2021.
(iii) Triennial reduced filers. Each covered company that is a
triennial reduced filer on October 1, 2020 and remains a triennial
reduced filer as of July 1, 2022 is required to submit a reduced
resolution plan pursuant to paragraph (c)(3) of this section on or
before July 1, 2022.
(2) With respect to any company that is a covered company as of
December 31, 2019, and changes filings groups specified in paragraphs
(a) through (c) of this section after October 1, 2020 and before the
date by which it would be required to submit a resolution plan under
paragraph (k)(1) of this section, the requirements for its initial
resolution plan after it changes filing groups will be determined
pursuant to paragraph (d)(1) of this section.
(3) Notwithstanding anything to the contrary in this paragraph (k),
a covered company that has been jointly directed by the Board and the
Corporation before December 31, 2019, to submit a resolution plan on or
before July 1, 2020 describing changes it has made to its most recent
resolution plan submission to address each shortcoming the agencies
identified in that resolution plan shall submit a responsive resolution
plan on or before July 1, 2020 in addition to any resolution plan that
such covered company is otherwise required to submit under this
section. The requirement to submit such a resolution plan on or before
July 1, 2020 does not alter the timing or type of resolution plan any
such covered company is required to submit under this section after
July 1, 2020.
Sec. __.5 Informational content of a full resolution plan.
(a) In general--(1) Domestic covered companies. A full resolution
plan of a covered company that is organized or incorporated in the
United States shall include the information specified in paragraphs (b)
through (h) of this section with respect to the subsidiaries and
operations that are domiciled in the United States as well as the
foreign subsidiaries, offices, and operations of the covered company.
(2) Foreign-based covered companies. A full resolution plan of a
covered company that is organized or incorporated in a jurisdiction
other than the United States (other than a bank holding company) or
that is a foreign banking organization shall include:
(i) The information specified in paragraphs (b) through (h) of this
section with respect to the subsidiaries, branches and agencies, and
identified critical operations and core business lines, as applicable,
that are domiciled in the United States or conducted in whole or
material part in the United States. With respect to the information
specified in paragraph (g) of this section, the resolution plan of a
foreign-based covered company shall also identify, describe in detail,
and map to legal entity the interconnections and interdependencies
among the U.S. subsidiaries, branches, and agencies, and between those
entities and:
(A) The identified critical operations and core business lines of
the foreign-based covered company; and
(B) Any foreign-based affiliate; and
(ii) A detailed explanation of how resolution planning for the
subsidiaries, branches and agencies, and identified critical operations
and core business lines of the foreign-based covered company that are
domiciled in the United States or conducted in whole or material part
in the United States is integrated into the foreign-based covered
company's overall resolution or other contingency planning process.
(b) Executive summary. Each full resolution plan of a covered
company shall include an executive summary describing:
(1) The key elements of the covered company's strategic plan for
rapid and orderly resolution in the event of material financial
distress at or failure of the covered company;
(2) A description of each material change experienced by the
covered company since the filing of the covered company's previously
submitted resolution plan (or affirmation that no such material change
has occurred);
(3) Changes to the covered company's previously submitted
resolution plan resulting from any:
(i) Change in law or regulation;
(ii) Guidance or feedback from the Board and the Corporation; or
(iii) Material change described pursuant to paragraph (b)(2) of
this section; and
(4) Any actions taken by the covered company since filing of the
previous resolution plan to improve the effectiveness of the covered
company's resolution plan or remediate or otherwise mitigate any
material weaknesses or impediments to effective and timely execution of
the resolution plan.
(c) Strategic analysis. Each full resolution plan shall include a
strategic analysis describing the covered company's plan for rapid and
orderly resolution in the event of material financial distress or
failure of the covered company. Such analysis shall:
(1) Include detailed descriptions of the:
(i) Key assumptions and supporting analysis underlying the covered
company's resolution plan, including any assumptions made concerning
the economic or financial conditions that would be present at the time
the covered company sought to implement such plan;
(ii) Range of specific actions to be taken by the covered company
to facilitate a rapid and orderly resolution of the covered company,
its material entities, and its identified critical operations and core
business lines in the event of material financial distress or failure
of the covered company;
(iii) Funding, liquidity and capital needs of, and resources
available to, the covered company and its material entities, which
shall be mapped to its identified critical operations and core business
lines, in the ordinary course of business and in the event of material
financial distress at or failure of the covered company;
(iv) Covered company's strategy for maintaining operations of, and
funding for, the covered company and its material entities, which shall
be mapped to its identified critical operations and core business
lines;
(v) Covered company's strategy in the event of a failure or
discontinuation of a material entity, core business line or identified
critical operation, and the actions that will be taken by the covered
company to prevent or mitigate any adverse effects of such failure or
discontinuation on the financial stability of the United States;
provided, however, if any such material entity is subject to an
insolvency regime other than the Bankruptcy Code, a covered company may
exclude that entity from its strategic analysis unless that entity
either has $50 billion or more in total assets or conducts an
identified critical operation; and
(vi) Covered company's strategy for ensuring that any insured
depository institution subsidiary of the covered company will be
adequately protected from risks arising from the activities of any
nonbank subsidiaries of the covered company (other than those that are
subsidiaries of an insured depository institution);
(2) Identify the time period(s) the covered company expects would
be needed for the covered company to successfully execute each material
aspect and step of the covered company's plan;
(3) Identify and describe any potential material weaknesses or
impediments to effective and timely execution of the covered company's
plan;
[[Page 59224]]
(4) Discuss the actions and steps the covered company has taken or
proposes to take to remediate or otherwise mitigate the weaknesses or
impediments identified by the covered company, including a timeline for
the remedial or other mitigatory action; and
(5) Provide a detailed description of the processes the covered
company employs for:
(i) Determining the current market values and marketability of the
core business lines, identified critical operations, and material asset
holdings of the covered company;
(ii) Assessing the feasibility of the covered company's plans
(including timeframes) for executing any sales, divestitures,
restructurings, recapitalizations, or other similar actions
contemplated in the covered company's resolution plan; and
(iii) Assessing the impact of any sales, divestitures,
restructurings, recapitalizations, or other similar actions on the
value, funding, and operations of the covered company, its material
entities, identified critical operations and core business lines.
(d) Corporate governance relating to resolution planning. Each full
resolution plan shall:
(1) Include a detailed description of:
(i) How resolution planning is integrated into the corporate
governance structure and processes of the covered company;
(ii) The covered company's policies, procedures, and internal
controls governing preparation and approval of the covered company's
resolution plan;
(iii) The identity and position of the senior management
official(s) of the covered company that is primarily responsible for
overseeing the development, maintenance, implementation, and filing of
the covered company's resolution plan and for the covered company's
compliance with this part; and
(iv) The nature, extent, and frequency of reporting to senior
executive officers and the board of directors of the covered company
regarding the development, maintenance, and implementation of the
covered company's resolution plan;
(2) Describe the nature, extent, and results of any contingency
planning or similar exercise conducted by the covered company since the
date of the covered company's most recently filed resolution plan to
assess the viability of or improve the resolution plan of the covered
company; and
(3) Identify and describe the relevant risk measures used by the
covered company to report credit risk exposures both internally to its
senior management and board of directors, as well as any relevant risk
measures reported externally to investors or to the covered company's
appropriate Federal regulator.
(e) Organizational structure and related information. Each full
resolution plan shall:
(1) Provide a detailed description of the covered company's
organizational structure, including:
(i) A hierarchical list of all material entities within the covered
company's organization (including legal entities that directly or
indirectly hold such material entities) that:
(A) Identifies the direct holder and the percentage of voting and
nonvoting equity of each legal entity and foreign office listed; and
(B) The location, jurisdiction of incorporation, licensing, and key
management associated with each material legal entity and foreign
office identified;
(ii) A mapping of the covered company's identified critical
operations and core business lines, including material asset holdings
and liabilities related to such identified critical operations and core
business lines, to material entities;
(2) Provide an unconsolidated balance sheet for the covered company
and a consolidating schedule for all material entities that are subject
to consolidation by the covered company;
(3) Include a description of the material components of the
liabilities of the covered company, its material entities, identified
critical operations and core business lines that, at a minimum,
separately identifies types and amounts of the short-term and long-term
liabilities, the secured and unsecured liabilities, and subordinated
liabilities;
(4) Identify and describe the processes used by the covered company
to:
(i) Determine to whom the covered company has pledged collateral;
(ii) Identify the person or entity that holds such collateral; and
(iii) Identify the jurisdiction in which the collateral is located,
and, if different, the jurisdiction in which the security interest in
the collateral is enforceable against the covered company;
(5) Describe any material off-balance sheet exposures (including
guarantees and contractual obligations) of the covered company and its
material entities, including a mapping to its identified critical
operations and core business lines;
(6) Describe the practices of the covered company, its material
entities and its core business lines related to the booking of trading
and derivatives activities;
(7) Identify material hedges of the covered company, its material
entities, and its core business lines related to trading and derivative
activities, including a mapping to legal entity;
(8) Describe the hedging strategies of the covered company;
(9) Describe the process undertaken by the covered company to
establish exposure limits;
(10) Identify the major counterparties of the covered company and
describe the interconnections, interdependencies and relationships with
such major counterparties;
(11) Analyze whether the failure of each major counterparty would
likely have an adverse impact on or result in the material financial
distress or failure of the covered company; and
(12) Identify each trading, payment, clearing, or settlement system
of which the covered company, directly or indirectly, is a member and
on which the covered company conducts a material number or value amount
of trades or transactions. Map membership in each such system to the
covered company's material entities, identified critical operations and
core business lines.
(f) Management information systems. (1) Each full resolution plan
shall include:
(i) A detailed inventory and description of the key management
information systems and applications, including systems and
applications for risk management, accounting, and financial and
regulatory reporting, used by the covered company and its material
entities. The description of each system or application provided shall
identify the legal owner or licensor, the use or function of the system
or application, service level agreements related thereto, any software
and system licenses, and any intellectual property associated
therewith;
(ii) A mapping of the key management information systems and
applications to the material entities, identified critical operations
and core business lines of the covered company that use or rely on such
systems and applications;
(iii) An identification of the scope, content, and frequency of the
key internal reports that senior management of the covered company, its
material entities, identified critical operations and core business
lines use to monitor the financial health, risks, and operation of the
covered company, its material entities, identified critical operations
and core business lines;
(iv) A description of the process for the appropriate supervisory
or regulatory agencies to access the management information systems and
[[Page 59225]]
applications identified in paragraph (f) of this section; and
(v) A description and analysis of:
(A) The capabilities of the covered company's management
information systems to collect, maintain, and report, in a timely
manner to management of the covered company, and to the Board, the
information and data underlying the resolution plan; and
(B) Any gaps or weaknesses in such capabilities, and a description
of the actions the covered company intends to take to promptly address
such gaps, or weaknesses, and the time frame for implementing such
actions.
(2) The Board will use its examination authority to review the
demonstrated capabilities of each covered company to satisfy the
requirements of paragraph (f)(1)(v) of this section. The Board will
share with the Corporation information regarding the capabilities of
the covered company to collect, maintain, and report in a timely manner
information and data underlying the resolution plan.
(g) Interconnections and interdependencies. To the extent not
provided elsewhere in this part, each full resolution plan shall
identify and map to the material entities the interconnections and
interdependencies among the covered company and its material entities,
and among the identified critical operations and core business lines of
the covered company that, if disrupted, would materially affect the
funding or operations of the covered company, its material entities, or
its identified critical operations or core business lines. Such
interconnections and interdependencies may include:
(1) Common or shared personnel, facilities, or systems (including
information technology platforms, management information systems, risk
management systems, and accounting and recordkeeping systems);
(2) Capital, funding, or liquidity arrangements;
(3) Existing or contingent credit exposures;
(4) Cross-guarantee arrangements, cross-collateral arrangements,
cross-default provisions, and cross-affiliate netting agreements;
(5) Risk transfers; and
(6) Service level agreements.
(h) Supervisory and regulatory information. Each full resolution
plan shall:
(1) Identify any:
(i) Federal, state, or foreign agency or authority (other than a
Federal banking agency) with supervisory authority or responsibility
for ensuring the safety and soundness of the covered company, its
material entities, identified critical operations and core business
lines; and
(ii) Other Federal, state, or foreign agency or authority (other
than a Federal banking agency) with significant supervisory or
regulatory authority over the covered company, and its material
entities and identified critical operations and core business lines.
(2) Identify any foreign agency or authority responsible for
resolving a foreign-based material entity and identified critical
operations or core business lines of the covered company; and
(3) Include contact information for each agency identified in
paragraphs (h)(1) and (2) of this section.
Sec. __.6 Informational content of a targeted resolution plan.
(a) In general. A targeted resolution plan is a subset of a full
resolution plan and shall include core elements of a full resolution
plan and information concerning key areas of focus as set forth in this
section.
(b) Targeted resolution plan content. Each targeted resolution plan
of a covered company shall include:
(1) The core elements;
(2) Such targeted information as the Board and Corporation may
jointly identify pursuant to paragraph (c) of this section;
(3) A description of each material change experienced by the
covered company since the filing of the covered company's previously
submitted resolution plan (or affirmation that no such material change
has occurred); and
(4) A description of changes to the covered company's previously
submitted resolution plan resulting from any;
(i) Change in law or regulation;
(ii) Guidance or feedback from the Board and the Corporation; or
(iii) Material change described pursuant to paragraph (b)(3) of
this section.
(c) Targeted information requests. No less than 12 months before
the date by which a covered company is required to submit a targeted
resolution plan, the Board and Corporation may jointly identify in
writing resolution-related key areas of focus, questions, and issues
that must also be addressed in the covered company's targeted
resolution plan.
(d) Deemed incorporation by reference. If a covered company does
not include in its targeted resolution plan a description of changes to
any information set forth in section 165(d)(1)(A), (B), or (C) of the
Dodd-Frank Act (12 U.S.C. 5365(d)(1)(A), (B), or (C)) since its
previously submitted resolution plan, such information from its
previously submitted resolution plan are incorporated by reference into
its targeted resolution plan.
Sec. __.7 Informational content of a reduced resolution plan.
(a) Reduced resolution plan content. Each reduced resolution plan
of a covered company shall include:
(1) A description of each material change experienced by the
covered company since the filing of the covered company's previously
submitted resolution plan (or affirmation that no such material change
has occurred); and
(2) A description of changes to the strategic analysis that was
presented in the covered company's previously submitted resolution plan
resulting from any:
(i) Change in law or regulation;
(ii) Guidance or feedback from the Board and the Corporation; or
(iii) Material change described pursuant to paragraph (a)(1) of
this section.
(b) Deemed incorporation by reference. If a covered company does
not include in its reduced resolution plan a description of changes to
any information set forth in section 165(d)(1)(A), (B), or (C) of the
Dodd-Frank Act (12 U.S.C. 5365(d)(1)(A), (B), or (C)) since its
previously submitted resolution plan, such information from its
previously submitted resolution plan are incorporated by reference into
its reduced resolution plan.
Sec. __.8 Review of resolution plans; resubmission of deficient
resolution plans.
(a) Review of resolution plans. The Board and Corporation will seek
to coordinate their activities concerning the review of resolution
plans, including planning for, reviewing, and assessing the resolution
plans, as well as such activities that occur during the periods between
resolution plan submissions.
(b) Joint determination regarding deficient resolution plans. If
the Board and Corporation jointly determine that the resolution plan of
a covered company submitted under Sec. __.4 is not credible or would
not facilitate an orderly resolution of the covered company under the
Bankruptcy Code, the Board and Corporation shall jointly notify the
covered company in writing of such determination. Any joint notice
provided under this paragraph (b) shall be provided pursuant to
paragraph (f) of this section and shall identify the deficiencies
identified by the Board and Corporation in the resolution plan. A
deficiency is an aspect of a covered company's resolution plan that the
[[Page 59226]]
Board and Corporation jointly determine presents a weakness that
individually or in conjunction with other aspects could undermine the
feasibility of the covered company's resolution plan.
(c) Resubmission of a resolution plan. Within 90 days of receiving
a notice of deficiencies issued pursuant to paragraph (b) of this
section, or such shorter or longer period as the Board and Corporation
may jointly determine, a covered company shall submit a revised
resolution plan to the Board and Corporation that addresses the
deficiencies jointly identified by the Board and Corporation, and that
discusses in detail:
(1) The revisions made by the covered company to address the
deficiencies jointly identified by the Board and the Corporation;
(2) Any changes to the covered company's business operations and
corporate structure that the covered company proposes to undertake to
facilitate implementation of the revised resolution plan (including a
timeline for the execution of such planned changes); and
(3) Why the covered company believes that the revised resolution
plan is credible and would result in an orderly resolution of the
covered company under the Bankruptcy Code.
(d) Extensions of time. Upon their own initiative or a written
request by a covered company, the Board and Corporation may jointly
extend any time period under this section. Each extension request shall
be supported by a written statement of the covered company describing
the basis and justification for the request.
(e) Joint determination regarding shortcomings in resolution plans.
The Board and Corporation may also jointly identify one or more
shortcomings in a covered company's resolution plan. A shortcoming is a
weakness or gap that raises questions about the feasibility of a
covered company's resolution plan, but does not rise to the level of a
deficiency for both the Board and Corporation. If a shortcoming is not
satisfactorily explained or addressed before or in the submission of
the covered company's next resolution plan, it may be found to be a
deficiency in the covered company's next resolution plan. The Board and
the Corporation may identify an aspect of a covered company's
resolution plan as a deficiency even if such aspect was not identified
as a shortcoming in an earlier resolution plan submission.
(f) Feedback. Following their review of a resolution plan, the
Board and the Corporation will jointly send a notification to each
covered company that identifies any deficiencies or shortcomings in the
covered company's resolution plan (or confirms that no deficiencies or
shortcomings were identified) and provides any feedback on the
resolution plan. The Board and the Corporation will jointly send the
notification no later than 12 months after the later of the date on
which the covered company submitted the resolution plan and the date by
which the covered company was required to submit the resolution plan,
unless the Board and the Corporation jointly determine in their
discretion that extenuating circumstances exist that require delay.
Sec. __.9 Failure to cure deficiencies on resubmission of a
resolution plan.
(a) In general. The Board and Corporation may jointly determine
that a covered company or any subsidiary of a covered company shall be
subject to more stringent capital, leverage, or liquidity requirements,
or restrictions on the growth, activities, or operations of the covered
company or the subsidiary if:
(1) The covered company fails to submit a revised resolution plan
under Sec. __.8(c) within the required time period; or
(2) The Board and the Corporation jointly determine that a revised
resolution plan submitted under Sec. __.8(c) does not adequately
remedy the deficiencies jointly identified by the Board and the
Corporation under Sec. __.8(b).
(b) Duration of requirements or restrictions. Any requirements or
restrictions imposed on a covered company or a subsidiary thereof
pursuant to paragraph (a) of this section shall cease to apply to the
covered company or subsidiary, respectively, on the date that the Board
and the Corporation jointly determine the covered company has submitted
a revised resolution plan that adequately remedies the deficiencies
jointly identified by the Board and the Corporation under Sec.
__.8(b).
(c) Divestiture. The Board and Corporation, in consultation with
the Council, may jointly, by order, direct the covered company to
divest such assets or operations as are jointly identified by the Board
and Corporation if:
(1) The Board and Corporation have jointly determined that the
covered company or a subsidiary thereof shall be subject to
requirements or restrictions pursuant to paragraph (a) of this section;
and
(2) The covered company has failed, within the 2-year period
beginning on the date on which the determination to impose such
requirements or restrictions under paragraph (a) of this section was
made, to submit a revised resolution plan that adequately remedies the
deficiencies jointly identified by the Board and the Corporation under
Sec. __.8(b); and
(3) The Board and Corporation jointly determine that the
divestiture of such assets or operations is necessary to facilitate an
orderly resolution of the covered company under the Bankruptcy Code in
the event the company was to fail.
Sec. __.10 Consultation.
Before issuing any notice of deficiencies under Sec. __.8(b),
determining to impose requirements or restrictions under Sec. __.9(a),
or issuing a divestiture order pursuant to Sec. __.9(c) with respect
to a covered company that is likely to have a significant impact on a
functionally regulated subsidiary or a depository institution
subsidiary of the covered company, the Board--
(a) Shall consult with each Council member that primarily
supervises any such subsidiary; and
(b) May consult with any other Federal, state, or foreign
supervisor as the Board considers appropriate.
Sec. __.11 No limiting effect or private right of action;
confidentiality of resolution plans.
(a) No limiting effect on bankruptcy or other resolution
proceedings. A resolution plan submitted pursuant to this part shall
not have any binding effect on:
(1) A court or trustee in a proceeding commenced under the
Bankruptcy Code;
(2) A receiver appointed under title II of the Dodd-Frank Act (12
U.S.C. 5381 et seq.);
(3) A bridge financial company chartered pursuant to 12 U.S.C.
5390(h); or
(4) Any other authority that is authorized or required to resolve a
covered company (including any subsidiary or affiliate thereof) under
any other provision of Federal, state, or foreign law.
(b) No private right of action. Nothing in this part creates or is
intended to create a private right of action based on a resolution plan
prepared or submitted under this part or based on any action taken by
the Board or the Corporation with respect to any resolution plan
submitted under this part.
(c) Form of resolution plans--(1) Generally. Each full, targeted,
and
[[Page 59227]]
reduced resolution plan of a covered company shall be divided into a
public section and a confidential section. Each covered company shall
segregate and separately identify the public section from the
confidential section.
(2) Public section of full and targeted resolution plans. The
public section of a full or targeted resolution plan shall consist of
an executive summary of the resolution plan that describes the business
of the covered company and includes, to the extent material to an
understanding of the covered company:
(i) The names of material entities;
(ii) A description of core business lines;
(iii) Consolidated or segment financial information regarding
assets, liabilities, capital and major funding sources;
(iv) A description of derivative activities and hedging activities;
(v) A list of memberships in material payment, clearing and
settlement systems;
(vi) A description of foreign operations;
(vii) The identities of material supervisory authorities;
(viii) The identities of the principal officers;
(ix) A description of the corporate governance structure and
processes related to resolution planning;
(x) A description of material management information systems; and
(xi) A description, at a high level, of the covered company's
resolution strategy, covering such items as the range of potential
purchasers of the covered company, its material entities, and its core
business lines.
(3) Public section of reduced resolution plans. The public section
of a reduced resolution plan shall consist of an executive summary of
the resolution plan that describes the business of the covered company
and includes, to the extent material to an understanding of the covered
company:
(i) The names of material entities;
(ii) A description of core business lines;
(iii) The identities of the principal officers; and
(iv) A description, at a high level, of the covered company's
resolution strategy, referencing the applicable resolution regimes for
its material entities.
(d) Confidential treatment of resolution plans. (1) The
confidentiality of resolution plans and related materials shall be
determined in accordance with applicable exemptions under the Freedom
of Information Act (5 U.S.C. 552(b)), 12 CFR part 261 (the Board's
Rules Regarding Availability of Information), and 12 CFR part 309 (the
Corporation's Disclosure of Information rules).
(2) Any covered company submitting a resolution plan or related
materials pursuant to this part that desires confidential treatment of
the information under 5 U.S.C. 552(b)(4), 12 CFR part 261 (the Board's
Rules Regarding Availability of Information), and 12 CFR part 309 (the
Corporation's Disclosure of Information rules) may file a request for
confidential treatment in accordance with those rules.
(3) To the extent permitted by law, information comprising the
Confidential Section of a resolution plan will be treated as
confidential.
(4) To the extent permitted by law, the submission of any nonpublic
data or information under this part shall not constitute a waiver of,
or otherwise affect, any privilege arising under Federal or state law
(including the rules of any Federal or state court) to which the data
or information is otherwise subject. Privileges that apply to
resolution plans and related materials are protected pursuant to
section 18(x) of the Federal Deposit Insurance Act (12 U.S.C. 1828(x)).
Sec. __.12 Enforcement.
The Board and Corporation may jointly enforce an order jointly
issued by the Board and Corporation under Sec. __.9(a) or (c). The
Board, in consultation with the Corporation, may take any action to
address any violation of this part by a covered company under section 8
of the Federal Deposit Insurance Act (12 U.S.C. 1818).
[END OF COMMON TEXT]
List of Subjects
12 CFR Part 243
Administrative practice and procedure, Banks, Banking, Holding
companies, Reporting and recordkeeping requirements, Securities.
12 CFR Part 381
Administrative practice and procedure, Banks, Banking, Holding
companies, Reporting and recordkeeping requirements, Resolution plans.
Adoption of the Common Rule Text
The adoption of the common rules by the agencies, as modified by
agency-specific text, is set forth below:
BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
12 CFR Chapter II
Authority and Issuance
For the reasons set forth in the preamble, the Board of Governors
of the Federal Reserve System revises part 243 to 12 CFR chapter II as
set forth in the text of the common rule at the end of the preamble and
further amends 12 CFR part 243 as follows:
PART 243--RESOLUTION PLANS (REGULATION QQ)
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1. The authority citation for part 243 continues to read as follows:
Authority: 12 U.S.C. 5365.
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2. The heading of part 243 is revised to read as set forth above.
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3. In Sec. 243.1, amend paragraph (a) by adding a sentence at the end
to read as follows:
Sec. 243.1 Authority and scope.
(a) * * * The Board is also issuing this part pursuant to section
165(a)(2)(C) of the Dodd-Frank Act.
* * * * *
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4. Add Sec. 243.13 to read as follows:
Sec. 243.13 Additional covered companies.
An additional covered company is any bank holding company or any
foreign bank or company that is a bank holding company or is treated as
a bank holding company under section 8(a) of the International Banking
Act of 1978 (12 U.S.C. 3106(a)) that is:
(a) Identified as a category II banking organization pursuant to
Sec. 252.5 of this title;
(b) Identified as a category III banking organization pursuant to
Sec. 252.5 of this title; or
(c) Made subject to this part by order of the Board.
[[Page 59228]]
FEDERAL DEPOSIT INSURANCE CORPORATION
12 CFR Chapter III
Authority and Issuance
For the reasons set forth in the preamble, the Federal Deposit
Insurance Corporation revises part 381 to 12 CFR chapter III as set
forth in the text of the common rule at the end of the preamble and
further amends 12 part 381 as follows:
PART 381--RESOLUTION PLANS
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5. The authority citation for part 381 continues to read as follows:
Authority: 12 U.S.C.5365(d).
Sec. 381.2 [Amended]
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6. In Sec. 381.2, in paragraph (1)(v) of the definition of ``covered
company'', add the words ``of this title'' after the phrase ``pursuant
to Sec. 243.13''.
By order of the Board of Governors of the Federal Reserve
System, October 23, 2019.
Margaret McCloskey Shanks,
Deputy Secretary of the Board.
Federal Deposit Insurance Corporation.
By order of the Board of Directors.
Dated at Washington, DC, on October 15, 2019.
Annmarie H. Boyd,
Assistant Executive Secretary.
[FR Doc. 2019-23967 Filed 10-31-19; 8:45 am]
BILLING CODE 6210-01-P 6714-01-P
