Guidance for Resolution Plan Submissions of Domestic Triennial Full Filers, 66388-66412 [2024-18191]

Agencies

• FEDERAL DEPOSIT INSURANCE CORPORATION
• FEDERAL RESERVE SYSTEM

[Federal Register Volume 89, Number 158 (Thursday, August 15, 2024)]
[Notices]
[Pages 66388-66412]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-18191]



[[Page 66388]]

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FEDERAL RESERVE SYSTEM

[Docket No. OP-1816]

FEDERAL DEPOSIT INSURANCE CORPORATION

RIN 3064-ZA37


Guidance for Resolution Plan Submissions of Domestic Triennial 
Full Filers

AGENCY: Board of Governors of the Federal Reserve System (Board) and 
Federal Deposit Insurance Corporation (FDIC).

ACTION: Final guidance.

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SUMMARY: The Board and the FDIC (together, the agencies) are adopting 
this final guidance for the 2025 and subsequent resolution plan 
submissions by certain domestic banking organizations. The final 
guidance is meant to assist these firms in developing their resolution 
plans, which are required to be submitted under the Dodd-Frank Wall 
Street Reform and Consumer Protection Act, as amended (the Dodd-Frank 
Act), and the jointly issued implementing regulation (the Rule). The 
scope of application of the final guidance is domestic triennial full 
filers (specified firms or firms), which are domestic Category II and 
III banking organizations. The final guidance describes the agencies' 
expectations, depending on the resolution strategy chosen by the firm, 
regarding a number of key vulnerabilities in plans for an orderly 
resolution under the U.S. Bankruptcy Code (i.e., capital; liquidity; 
governance mechanisms; operational; legal entity rationalization; and 
insured depository institution (IDI) resolution, if applicable). The 
final guidance modifies and clarifies certain aspects of the proposed 
guidance based on the agencies' consideration of comments to the 
proposal, additional analysis, and further assessment of the business 
and risk profiles of the firms.

DATES: The final guidance is available on August 15, 2024.

FOR FURTHER INFORMATION CONTACT: 
    Board: Catherine Tilford, Deputy Associate Director, (202) 452-
5240, Elizabeth MacDonald, Assistant Director, (202) 475-6316, Tudor 
Rus, Manager, (202) 475-6359, Mason Laird, Senior Financial Institution 
Policy Analyst II, (202) 912-7907, Caroline Elkin, Senior Financial 
Institution Policy Analyst, (202) 263-4888, Division of Supervision and 
Regulation; or Jay Schwarz, Deputy Associate General Counsel, (202) 
452-2970; Andrew Hartlage, Special Counsel, (202) 452-6483; Brian 
Kesten, Counsel, (202) 843-4079; or Sarah Podrygula, Senior Attorney, 
(202) 912-4658, Legal Division, Board of Governors of the Federal 
Reserve System, 20th Street and Constitution Avenue NW, Washington, DC 
20551. For users of TTY-TRS, please call 711 from any telephone, 
anywhere in the United States.
    FDIC: Robert C. Connors, Senior Advisor, (202) 898-3834; Mark E. 
Haley, Chief, (917) 320-2911, Patrick R. Bittner, Senior Policy 
Specialist, (202) 898-6571, Division of Complex Financial Institution 
Supervision and Resolution; Celia Van Gorder, Assistant General Counsel 
(Acting), (202) 898-6749; Dena S. Kessler, Counsel, (202) 898-3833; 
Gregory J. Wach, Counsel, (202) 898-6972, Legal Division.

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Introduction
    A. Background
    B. Connection to Other Rulemakings
    C. Proposed Guidance
II. Overview of Comments
III. Final Guidance
    A. Scope of Application
    B. Transition Period
    C. Capital
    D. Liquidity
    E. Governance Mechanisms
    F. Operational
    G. Legal Entity Rationalization and Separability
    H. Insured Depository Institution Resolution
    I. Derivatives and Trading Activities
    J. Format and Structure of Plans; Assumptions
    K. Additional Comments
IV. Paperwork Reduction Act
V. Text of the Final Guidance

I. Introduction

A. Background

    Section 165(d) of the Dodd-Frank Act \1\ and the Rule \2\ require 
certain financial institutions to report periodically to the Board and 
the FDIC 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 Rule divides covered companies into 
three groups of filers: (a) biennial filers, (b) triennial full filers, 
and (c) triennial reduced filers.\3\ The terms ``covered company'' and 
``triennial full filer'' have the meanings given in the Rule, as do 
other, similar terms used throughout this final guidance document.
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    \1\ 12 U.S.C. 5365(d).
    \2\ 12 CFR parts 243 and 381.
    \3\ 12 CFR 243.4 and 381.4.
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    Triennial full filers under the Rule are required to file a 
resolution plan every three years, alternating between full and 
targeted resolution plans.\4\ The Rule requires each covered company's 
full resolution plan to include, among other things, a strategic 
analysis of the plan's components, a description of the range of 
specific actions the covered company proposes to take in resolution, 
and a description of the covered company's organizational structure, 
material entities, and interconnections and interdependencies.\5\ 
Targeted resolution plans are required to include a subset of 
information contained in a full plan.\6\ In addition, the Rule requires 
that all resolution plans consist of two parts: a confidential section 
that contains any confidential supervisory and proprietary information 
submitted to the agencies, and a section that the agencies make 
available to the public.\7\ Public sections of resolution plans can be 
found on the agencies' websites.\8\
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    \4\ 12 CFR 243.4(b) and 381.4(b).
    \5\ 12 CFR 243.5 and 381.5.
    \6\ 12 CFR 243.6(b) and 381.6(b).
    \7\ 12 CFR 243.11(c) and 381.11(c).
    \8\ The public sections of resolution plans submitted to the 
agencies are available at www.federalreserve.gov/supervisionreg/resolution-plans.htm and www.fdic.gov/regulations/reform/resplans/.
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Recent Developments
    Implementation of the Rule has been an iterative process aimed at 
strengthening the resolution planning capabilities of financial 
institutions subject to the Rule. To assist the development of covered 
companies' resolution planning capabilities and plan submissions, the 
agencies have provided feedback on individual plan submissions, issued 
guidance to certain groups of covered companies, and issued answers to 
frequently asked questions. The agencies believe that guidance can help 
focus the efforts of similarly situated covered companies to improve 
their resolution capabilities and clarify the agencies' expectations 
for those filers' future progress in their resolution plans. To date, 
the agencies have issued guidance to (a) U.S. global systemically 
important banks (GSIBs),\9\

[[Page 66389]]

which constitute the biennial filer group; and (b) certain large 
foreign banking organizations (FBOs) that are triennial full 
filers.\10\ The agencies have not, however, thus far issued guidance to 
domestic triennial full filers and the additional FBOs that make up the 
remainder of the triennial full filers.
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    \9\ Guidance for section 165(d) Resolution Plan Submissions by 
Domestic Covered Companies applicable to the Eight Largest, Complex 
U.S. Banking Organizations, 84 FR 1438 (Feb. 4, 2019) (2019 U.S. 
GSIB Guidance).
    \10\ Guidance for Resolution Plan Submissions of Certain 
Foreign-Based Covered Companies, 85 FR 83557 (Dec. 22, 2020) (2020 
FBO Guidance).
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    Several developments inform the final guidance:
     The agencies' consideration of comments to the proposed 
guidance (as defined below);
     The agencies' review of domestic triennial full filers' 
2021 resolution plans and the issuance of individual letters 
communicating the agencies' feedback on those submitted plans;
     The agencies' recent experience with the resolutions of 
Silicon Valley Bank, Signature Bank, and First Republic Bank, and 
related stress experienced by a range of other financial institutions; 
and
     The agencies' analysis of the current risk profiles of the 
domestic triennial full filers.
    The preamble to the 2019 revisions to the Rule indicated that the 
agencies would make any future resolution guidance available for 
comment,\11\ and on August 29, 2023, the agencies invited comments on 
proposed guidance for the 2024 and subsequent resolution plan 
submissions by domestic triennial full fillers (proposed guidance or 
proposal).\12\
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    \11\ Resolution Plans Required, 84 FR 59194, 59204 (Nov. 1, 
2019) (2019 Federal Register Rule Publication).
    \12\ https://www.federalreserve.gov/newsevents/pressreleases/bcreg20230829b.htm; https://www.fdic.gov/news/press-releases/2023/pr23067.html. See also Guidance for Resolution Plan Submissions of 
Domestic Triennial Full Filers, 88 FR 64626 (Sept. 19, 2023).
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    The Rule requires triennial full filers to submit their resolution 
plans on or before July 1 of each year in which a resolution plan is 
due.\13\ At the time the agencies issued the proposed guidance, 
triennial full filers were required to submit their next resolution 
plans on or before July 1, 2024. In the proposal, the agencies 
requested comment about whether the agencies should provide more than 
six months for firms to take into consideration the expectations in the 
finalized guidance. Several comments discussed the timing of the next 
resolution plan submission and its relationship to the final guidance 
as well as other regulatory requirements. Most requested extensions, 
with several requesting at least a year and one stating six months 
would be adequate. Two commenters stated a maximum of six months from 
publication of the final guidance to the first submission would be 
adequate.
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    \13\ 12 CFR 243.4(b)(3) and 381.4(b)(3).
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    On January 17, 2024, the agencies announced an extension of the 
resolution plan submission deadline for the triennial full filers from 
July 1, 2024, to March 31, 2025.\14\ At this time, the agencies are 
further extending the 2025 resolution plan submission deadline for all 
triennial full filers to October 1, 2025, to provide the firms with 
sufficient time to develop their full resolution plans in light of the 
final guidance. The agencies are also clarifying that all triennial 
full filers' subsequent resolution plan submission, a targeted 
resolution plan, is due on or before July 1, 2028, and that future 
resolution plan submissions will be due every three years after that, 
alternating between full and targeted resolution plans, pursuant to the 
Rule,\15\ unless the agencies exercise their authority under the Rule 
to alter the submission date for future resolution plan 
submissions.\16\
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    \14\ https://www.federalreserve.gov/newsevents/pressreleases/bcreg20240117a.htm; https://www.fdic.gov/news/press-releases/2024/pr24002.html.
    \15\ 12 CFR 243.4(b) and 381.4(b).
    \16\ 12 CFR 243.4(d)(2) and 381.4(d)(2).
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Resolution Plan Strategy
    U.S.-based covered companies subject to the Rule have adopted one 
of two resolution strategies: (1) a single point of entry (SPOE) 
strategy where only the top tier bank holding company enters resolution 
through a bankruptcy proceeding; or (2) a multiple point of entry 
(MPOE) strategy where the top tier bank holding company files for 
bankruptcy, the FDIC-insured bank subsidiary enters resolution pursuant 
to the Federal Deposit Insurance Act of 1950, as amended (the FDI Act), 
and where other entities enter the appropriate resolution regimes. The 
SPOE and MPOE resolution strategies that firms have chosen present 
different risks and entail different types of planning and development 
of capabilities; accordingly, the proposal contained content applicable 
to SPOE resolution strategies and separate content applicable to MPOE 
resolution strategies.
    Commenters supported inclusion of expectations for both MPOE and 
SPOE resolution strategies, and supported firms' ability to choose 
either strategy. However, some commenters questioned whether the 
agencies were expecting or encouraging firms to adopt an SPOE 
resolution strategy and recommended that the agencies disclose publicly 
whether they prefer a particular resolution strategy, and engage in 
notice and comment rulemaking if they do. For firms that change 
resolution strategies, some commenters requested that the agencies 
provide a transition period and made statements about the preferred 
length of such a transition period, and one requested that the agencies 
not issue any findings regarding a firm's first resolution plan that 
adopts a different resolution strategy.
    The agencies do not prescribe a specific resolution strategy for 
any firm. This guidance, similarly, does not suggest that any firm 
should change its resolution strategy, nor are the agencies identifying 
a preferred strategy for a specific firm or set of firms. The selection 
of a preferred strategy, including MPOE or SPOE as a preferred 
resolution strategy, should reflect the characteristics of the firm and 
its business operations and support the goal of the resolution plan to 
substantially mitigate serious adverse effects of the firm's failure on 
financial stability in the United States. Each firm remains free to 
choose the resolution strategy it believes would most effectively 
facilitate a rapid and orderly resolution.
    The agencies are providing separate guidance for an SPOE resolution 
strategy and an MPOE resolution strategy in acknowledgment that firms 
are free to adopt the resolution strategy that best suits their 
operations and organizations. Further, the agencies note there may be 
resolution strategies other than SPOE and MPOE that could facilitate a 
rapid and orderly resolution. The specified firms should continue to 
submit resolution plans using the resolution strategies they believe 
would be most effective in achieving an orderly resolution of their 
firms. Regardless of strategy, a resolution plan should address the key 
vulnerabilities, support the underlying assumptions required to 
successfully execute the chosen resolution strategy, and demonstrate 
the adequacy of the capabilities necessary to execute the selected 
strategy.
    Moreover, because the agencies do not prescribe resolution 
strategies, firms may voluntarily change their preferred strategy in 
the future. However, reflecting the voluntary nature of resolution 
strategy changes, the agencies do not anticipate providing a transition 
period during which a firm would be free from potential findings under 
the Rule while it effectuates a change in resolution strategy, whether 
from MPOE to SPOE, or to any other resolution strategy. A firm controls 
the timing of when it submits its first plan with a different strategy; 
accordingly, it can take the time it needs to put in place the

[[Page 66390]]

resources and capabilities needed to submit a plan that satisfies the 
standard in section 165(d) of the Dodd-Frank Act and the Rule. The 
standard of review for a resolution plan submission of a firm that 
transitions to a new strategy is therefore the same as for any firm 
subject to the Rule.\17\
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    \17\ See 12 CFR 243.8 and 381.8.
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B. Connection to Other Rulemakings

Long-Term Debt Proposal
    The agencies, as well as the Office of the Comptroller of the 
Currency (together with the agencies, the Federal banking agencies), 
issued in August 2023 a proposed rule for comment that would require 
certain large holding companies, U.S. intermediate holding companies of 
FBOs, and certain IDIs, to issue and maintain outstanding a minimum 
amount of long-term debt (LTD), among other proposed requirements.\18\ 
The agencies have received comments on the LTD proposal, and will 
consider all comments received in context of the LTD rulemaking. The 
agencies requested comments on the proposed guidance that take the LTD 
proposal into consideration.
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    \18\ https://www.federalreserve.gov/newsevents/pressreleases/bcreg20230829a.htm; https://www.fdic.gov/news/press-releases/2023/pr23065.html. See also Long-Term Debt Requirements for Large Bank 
Holding Companies, Certain Intermediate Holding Companies of Foreign 
Banking Organizations, and Large Insured Depository Institutions, 88 
FR 64524 (Sept. 19, 2023) (LTD proposal).
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    One commenter recommended that, for purposes of their resolution 
plans, firms should only assume their existing outstanding LTD and not 
the projected LTD that would be in place once the firm has achieved 
full compliance with the LTD proposal. Another commenter argued that 
the agencies should consider the interaction between the proposed 
guidance and LTD proposal, with a goal of having them work together to 
improve the resolvability of applicable banking organizations and avoid 
duplicative or contradictory requirements. The commenter also asserted 
that calibration of an IDI's internal LTD requirement could lead 
banking organizations using an MPOE resolution strategy to adopt an 
SPOE resolution strategy because of the costs of compliance with such 
internal LTD issuance. One commenter discussed whether the agencies 
should align the objectives of the LTD proposal and the resolution 
planning under the Rule.
    The Federal banking agencies have not finalized the LTD rulemaking 
as of the issuance of this final guidance. The agencies recognize that 
LTD issued and maintained by a specified firm could affect the firm's 
strategic analysis of the funding, liquidity, and capital needs of, and 
resources available to, the covered company and its material 
entities.\19\ However, the agencies believe that the finalization of a 
requirement to maintain a specified amount of LTD would not affect this 
guidance in any material way. Any final LTD rule will address the 
manner in which its requirements will be implemented. This final 
guidance is intended to convey the agencies' expectations regarding the 
content of resolution plan submissions, and not to contradict, modify, 
or accelerate a company's obligations under other laws or regulations. 
As provided in the final guidance, firms should develop their 
resolution plans in accordance with the current state of the applicable 
legal and policy frameworks. The agencies also recognize, however, that 
there may be phase-in periods during which rules become effective. 
Should the LTD rule be finalized in advance of October 1, 2025, the 
agencies will not expect firms to incorporate the requirements of the 
rule into their 2025 resolution plan submissions. This should provide 
firms covered by the LTD rule with reasonable time to consider any 
final LTD rule in a future resolution plan submission.
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    \19\ See 12 CFR 243.5(c)(1)(iii) and 381.5(c)(1)(iii).
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    Further, and as noted above, the agencies are not recommending that 
any specified firm adopt any particular strategy in response to this 
guidance or the LTD proposal.
FDIC IDI Resolution Plan Proposal
    The agencies received three comments on the connection between the 
proposal and the IDI Rule.\20\ The FDIC published proposed revisions to 
the IDI Rule on September 19, 2023,\21\ and published final revisions 
on July 9, 2024.\22\ Those commenters recommended coordinating aspects 
of the proposed guidance and the Proposed IDI Rule, including having 
consistent terms and concepts. One commenter requested that cross-
referencing to section 165(d) resolution plans be permitted under the 
Proposed IDI Rule. Another comment questioned whether a more holistic 
approach would be possible to synchronize the requirements of section 
165(d) planning and IDI Rule resolution planning. One commenter 
asserted that the MPOE guidance could cause confusion on the part of 
firms by conflating resolution strategies and the underlying purpose of 
the Rule and the IDI Rule.
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    \20\ 12 CFR 360.10 (IDI Rule).
    \21\ Resolution Plans Required for Insured Depository 
Institutions With $100 Billion or More in Total Assets; 
Informational Filings Required for Insured Depository Institutions 
With at Least $50 Billion But Less Than $100 Billion in Total 
Assets, 88 FR 64579 (Sept. 19, 2023) (Proposed IDI Rule).
    \22\ Resolutions Plans Required for Insured Depository 
Institutions with $100 Billion or More in Total Assets; 
Informational Filings Required for Insured Depository Institutions 
With at Least $50 Billion but Less Than $100 Billion in Total 
Assets, 89 FR 56620 (July 9, 2024).
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    The Rule requires a covered company to submit a resolution plan 
that would allow for the rapid and orderly resolution of the firm under 
the Bankruptcy Code in the event of material financial distress or 
failure. The final guidance clarifies the agencies' expectations 
regarding certain topics and provides direction as to how a covered 
company may demonstrate its compliance with its statutory obligation 
under section 165(d) of the Dodd-Frank Act to develop a resolution plan 
allowing for its rapid and orderly resolution. The IDI Rule serves a 
different purpose: the IDI Rule assists the FDIC in preparing to manage 
the resolution of a covered insured depository institution. While these 
two rules may be complementary, they are not the same. Additionally, 
whether to align the IDI Rule with the Rule or permit cross-referencing 
to section 165(d) resolution plans under the IDI Rule is outside the 
scope of this guidance.

C. Proposed Guidance

    On August 29, 2023, the agencies invited public comment on proposed 
guidance for how domestic triennial full filers' resolution plans could 
address key challenges in resolution, which was proposed to apply 
beginning with the specified firms' 2024 resolution plan 
submissions.\23\ The proposal identified the banking organizations to 
which the guidance would apply and articulated several areas of 
guidance: capital; liquidity; governance mechanisms; operational; legal 
entity rationalization and separability; and IDI resolution, if 
applicable. The proposed guidance described the agencies' proposed 
expectations for each of these areas. Most substantive topics were 
bifurcated, with separate guidance for an SPOE resolution strategy and 
an MPOE resolution strategy. The proposed guidance concluded with 
information about the format and structure of a plan that applied 
equally to plans contemplating either an SPOE resolution strategy or an 
MPOE resolution strategy.
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    \23\ Supra note 12.
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    The proposed guidance for firms that adopt an SPOE resolution 
strategy was generally based on the 2019 U.S. GSIB Guidance, with 
certain modifications

[[Page 66391]]

that reflected the specific characteristics of and potential risks 
posed by the failure of the specified firms. The proposed guidance for 
firms that adopt an MPOE resolution strategy incorporated certain 
aspects of the 2019 U.S. GSIB Guidance that the agencies believed are 
applicable to large banking organizations, with modifications 
appropriate to this strategy and institutions with the characteristics 
displayed by the specified firms. For MPOE firms, the proposed guidance 
also omitted aspects of the 2019 U.S. GSIB Guidance that would not be 
pertinent to MPOE resolution strategies. The agencies also proposed to 
clarify their expectations for specified firms that adopt an MPOE 
resolution strategy that includes the resolution of a material entity 
that is a U.S. IDI.
    The agencies invited comments on all aspects of the proposed 
guidance. The agencies also specifically requested comments on a number 
of issues, including the interaction of resolution guidance with a 
final long-term debt rule, the amount of time between the publication 
of the final guidance and the firms' next resolution plans, the 
appropriateness of guidance on IDI resolution, and whether to issue 
derivatives and trading expectations.

II. Overview of Comments

    The agencies received and reviewed eight comment letters on the 
proposed guidance. Commenters included various financial services trade 
associations, a law firm, two public interest groups, and certain 
individuals. In addition, the agencies met with representatives of a 
banking organization that would be a specified firm and a trade 
association that represents banking organizations that would be 
specified firms at their request to discuss issues relating to the 
proposed guidance.\24\ This section provides an overview of the general 
themes raised by commenters. The comments received on the proposed 
guidance are further discussed below in the sections describing the 
final guidance (and, in some cases, previously in section I), including 
any changes that the agencies have made to the proposed guidance in 
response to comments.
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    \24\ Summaries of those meetings and copies of the comments can 
be found on each agency's website. https://www.federalreserve.gov/apps/foia/ViewComments.aspx?doc_id=OP-1816&doc_ver=1; https://www.fdic.gov/resources/regulations/federal-register-publications/2023/2023-guidance-resolution-plan-submissions-domestic-triennial-3064-za37.html.
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Differentiating Expectations Based on Size, Complexity, and Risk
    One commenter contended that the proposed guidance did not 
sufficiently differentiate expectations among firms subject to 
resolution planning guidance. The commenter argued that section 165 of 
the Dodd-Frank Act requires the agencies to tailor application of 
prudential standards issued pursuant to that section, such as 
resolution planning guidance; contended that the proposal was too 
similar to the 2019 U.S. GSIB Guidance; and encouraged expectations in 
the final guidance to be further differentiated based on size, risk, 
and other factors.
Resolution Strategy and Transition Period
    Several commenters supported the proposal's inclusion of 
expectations for both MPOE and SPOE resolution strategies and the 
agencies' statement that firms have ability to choose their preferred 
strategy. However, as noted above, some commenters questioned whether 
the agencies were expecting or encouraging firms to adopt an SPOE 
resolution strategy and recommended that the agencies disclose publicly 
whether they prefer a particular resolution strategy. For firms that 
change resolution strategies, some commenters requested that the 
agencies provide a transition period during which the agencies would 
not make credibility findings in connection with a plan review.
Capital and Liquidity
    The agencies received a number of comments on the capital and 
liquidity sections of the proposed guidance. Regarding the capital 
section of the proposed guidance, one commenter asserted that including 
expectations regarding the positioning of capital for firms with an 
SPOE resolution strategy is premature given that finalization of a 
proposal to modify the capital requirements for large banking 
organizations \25\ and the LTD proposal may impact firms' capital 
planning, contended that the proposal included expectations that are 
duplicative of existing capital requirements, and suggested removing 
the guidance on Resolution Capital Adequacy and Positioning (RCAP) from 
the final guidance. Regarding expectations for firms using an MPOE 
resolution strategy, one commenter agreed that additional expectations 
are not warranted, while another commenter argued for capital plans for 
each material entity and asked the agencies to align expectations for 
the MPOE capital guidance with SPOE capital guidance.
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    \25\ Regulatory Capital Rule: Large Banking Organizations and 
Banking Organizations With Significant Trading Activity, 88 FR 64028 
(Sept. 18, 2023) (Capital proposal).
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    Regarding the liquidity section of the proposed guidance, one 
commenter argued that Resolution Liquidity Adequacy and Positioning 
(RLAP) expectations are not appropriate due to the comparatively simple 
legal entity structures and reduced risk profiles of these firms and 
claimed that RLAP is redundant with certain regulatory requirements. In 
addition, one commenter requested that the final guidance strengthen 
expectations for liquidity in resolution by including a procedure or 
protocol for liquidity related decisions, irrespective of resolution 
strategy.
IDI Resolution Analysis
    The agencies received a number of comments on the proposed guidance 
related to the resolution of a subsidiary material entity U.S. IDI. 
Multiple commenters requested clarity on how the firm's plan should 
address the expectations regarding the FDIC's statutory least-cost 
requirement and questioned whether there is sufficient information 
available for firms to effectively evaluate whether a proposed 
resolution plan would satisfy the least-cost analysis expectations. 
These commenters also questioned whether the least-cost analysis would 
be of value to FDIC in an actual resolution and argued that the 
guidance should be aligned with the requirements of the IDI Rule. One 
stated sufficient time should be given for firms to conduct new 
analyses and seek additional guidance from the agencies and that 
aspects of this section of the proposal should not be finalized.
    Another commenter argued that firms should not be expected to 
demonstrate that their preferred strategy would be consistent with the 
FDIC's statutory least-cost requirement. One commenter further 
suggested that the Proposed IDI Rule is a better forum to address how 
IDI subsidiaries can be resolved under the FDI Act.
    Another commenter suggested that the agencies should require firms 
to develop resolution strategies involving bridge depository 
institutions (BDIs) and recommended that the guidance address the value 
of assets transferred to such a BDI, how the resolution plan would 
address the IDI's franchise value, and how the preferred resolution 
strategy would result in a least-costly resolution.

[[Page 66392]]

Derivatives and Trading
    Some commenters supported including expectations for derivatives 
and trading activity in the final guidance, contending that derivatives 
activity for domestic triennial full filers may increase in the future 
and proposed applying such guidance to firms with net derivatives 
exceeding a given threshold. However, one commenter supported not 
including such expectations, stating it was appropriate to exclude such 
guidance because the specified firms have limited derivatives and 
trading portfolios, particularly relative to the U.S. G-SIB banking 
organizations covered by such guidance.
Connection to Other Rules
    The agencies received a number of comments about the interaction of 
the proposed guidance with several other rulemaking initiatives by the 
Federal banking agencies. For example, some commenters recommended 
coordinating the FDIC's Proposed IDI Rule revisions with the resolution 
plan rule and final guidance for the specified firms. Two commenters 
suggested that the agencies consider the interaction between the 
proposed guidance and the LTD proposal to ensure the two proposals work 
together to improve the resolvability of applicable banking 
organizations and avoid duplicative or contradictory requirements. One 
commenter also expressed concern including certain expectations in the 
final guidance, such as those relating to capital, would be premature 
before finalizing the Capital proposal and LTD proposal, which impact 
firms' capital planning.
Timing of Next Resolution Plan
    Several comments discussed the timing of the next resolution plan 
submission and its relationship to this final guidance. Some commenters 
recommended providing at least one year between issuing final guidance 
and the deadline for domestic triennial full filers' next resolution 
plan submissions. However, other commenters suggested that six months 
from publication of the final guidance to the first resolution plan 
submission would be adequate for firms to take into account the 
guidance.

III. Final Guidance

    After considering the comments, conducting additional analysis, and 
further assessing the business and risk profiles of domestic triennial 
full filers, the agencies are issuing final guidance that includes 
certain modifications and clarifications from the proposal. In 
particular, the capital, liquidity, governance mechanisms, operational, 
IDI resolution, separability, and assumptions sections of the final 
guidance reflect changes from the proposed guidance. In addition, as 
was noted in the proposal,\26\ the final guidance consolidates all 
prior resolution planning guidance for the firms in one document. 
Further, as was noted in the proposal,\27\ the final guidance is not 
intended to override the obligation of an individual firm to respond in 
its next resolution plan submission to pending items of individual 
feedback or any shortcomings or deficiencies jointly identified or 
determined by the agencies in that firm's prior resolution plan 
submissions. The guidance is drafted to reflect the current conditions 
in the industry and institutions as they exist today.
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    \26\ See proposed guidance at 88 FR 64628.
    \27\ See id.
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    As discussed below,\28\ several commenters asserted that the 
proposal did not adequately differentiate among covered companies based 
on their size, complexity, and risk to financial stability. The 
guidance, however, takes into account the size and complexity of firms, 
their resolution strategy, and whether they are based in the United 
States or in a foreign jurisdiction. In addition, the final guidance is 
not meant to limit firms' consideration of additional vulnerabilities 
or obstacles that might arise based on a firm's particular structure, 
operations, or resolution strategy.
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    \28\ See infra section III.K of this document.
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    The agencies also note that commenters described certain 
expectations that are set forth in the guidance as ``requirements.'' As 
the agencies indicated in the proposed guidance and are now 
reaffirming, the final guidance does not have the force and effect of 
law. Rather, the final guidance outlines the agencies' supervisory 
expectations regarding each subject area covered by the final 
guidance.\29\ The final guidance includes language reflecting this 
position.\30\
---------------------------------------------------------------------------

    \29\ See 12 CFR 262.7 and appendix A to 12 CFR part 262; 12 CFR 
part 302.
    \30\ See infra section V.I of this document.
---------------------------------------------------------------------------

    Finally, the agencies made several minor, non-substantive changes 
from the proposal, including to align the wording of guidance directed 
at firms that adopt an SPOE resolution strategy and firms that adopt an 
MPOE resolution strategy.

A. Scope of Application

    The agencies proposed applying the guidance to all domestic 
triennial full filers and invited comment on all aspects of the 
proposed scope of the guidance. The agencies received no comments 
concerning the scope of the guidance's application and are finalizing 
this section of the guidance as proposed.

B. Transition Period

    The proposed guidance did not describe how the guidance would be 
applied to domestic banking organizations that become covered by its 
scope, but it did request comment on all aspects of the proposed scope 
of application. To provide certainty to domestic banking organizations, 
the final guidance states that when a domestic banking organization 
becomes a specified firm, the final guidance will apply to the firm's 
next resolution plan submission with a submission date that is at least 
12 months after the time the firm becomes a specified firm.\31\ If a 
specified firm ceases to be a domestic triennial full filer, it will no 
longer be considered a specified firm, and the guidance will no longer 
be applicable to that firm as of the date the firm ceases to be a 
domestic triennial full filer.
---------------------------------------------------------------------------

    \31\ The plan type for that next submission remains as specified 
by the Rule, i.e., a full or targeted resolution plan. See 12 CFR 
243.4 and 381.4.
---------------------------------------------------------------------------

C. Capital

    For specified firms with an SPOE resolution strategy, the agencies 
proposed capital expectations substantially similar to those in the 
2019 U.S. GSIB Guidance. The ability to provide sufficient capital to 
material entities without disruption from creditors is essential to an 
SPOE resolution strategy's objective of ensuring that material entities 
can continue to operate as the firm is resolved. The proposal described 
expectations concerning the appropriate positioning of capital and 
other loss-absorbing instruments (e.g., debt that a parent holding 
company may choose to forgive or convert to equity) among the material 
entities within the firm (RCAP). The proposal also described 
expectations regarding a methodology for periodically estimating the 
amount of capital that may be needed to support each material entity 
after the bankruptcy filing (resolution capital execution need, or 
RCEN).
    The agencies received several comments on the capital section of 
the proposed guidance. One commenter asserted that including 
expectations in this guidance regarding the positioning of capital is 
premature given that finalization of the Capital proposal and the LTD 
proposal may impact firms' capital planning. The commenter argued

[[Page 66393]]

that existing capital requirements are sufficient for the size and 
complexity of the firms subject to this guidance without RCAP 
expectations, which, the commenter asserted, would add more complexity 
to the resolution planning process.
    After reviewing these comments, the agencies are finalizing this 
section of the guidance generally as proposed, but with one 
clarification. Proposed guidance related to the methodology for 
periodically estimating the amount of capital that may be needed to 
support material entities in bankruptcy (RCEN) could have been 
construed as establishing a mandatory minimum capital requirement. As 
the agencies have discussed elsewhere, resolution plan guidance is not 
binding and does not establish legal requirements.\32\ The final 
guidance clarifies the kind of information the agencies expect a firm 
to provide if that firm's resolution strategy includes recapitalizing 
material entities but does not establish requirements for firms.
---------------------------------------------------------------------------

    \32\ See supra section III of this document.
---------------------------------------------------------------------------

    RCAP expectations are important for firms to ensure the appropriate 
positioning of capital and other loss-absorbing instruments among the 
material entities within the firm and to effectively execute a SPOE 
resolution strategy. Finalizing RCAP expectations is not premature in 
light of outstanding proposals such as the LTD rulemaking and other 
pending rules because the RCAP expectations can be achieved with or 
without the LTD contemplated in the LTD proposal. The Federal banking 
agencies have not finalized the LTD proposal as of the issuance of this 
final guidance, and comments on that proposed rule are currently under 
consideration. Specifically, the final guidance does not rely on or 
presume the finalization of pending rules and instead states, 
consistent with the proposal, that a resolution plan should be based on 
the current state of the applicable legal and policy frameworks.\33\ 
The guidance is intended to assist firms in developing their resolution 
plans, which are required to be submitted pursuant to the Dodd-Frank 
Act and the Rule. While other capital and resolution-related rules may 
establish minimum standards applicable to firms submitting resolution 
plans, this guidance is designed to facilitate a firm's own analysis of 
its expected needs in resolution across that firm's material entities.
---------------------------------------------------------------------------

    \33\ See infra section V.VIII of this document.
---------------------------------------------------------------------------

    Additionally, the stress experienced by and the failure of several 
large banking organizations in March 2023 highlighted the fast-moving 
nature of stress events, as several banking organizations entered 
resolution proceedings rapidly. These events also highlighted the 
potential for the failure of a large regional banking organization to 
affect financial stability. Successful execution of an SPOE resolution 
strategy--including the need to ensure that individual material 
entities have adequate capital to maintain operations as the firm is 
resolved--is unlikely to be successful under a short time frame without 
advance planning. Appropriate positioning of capital and other loss-
absorbing instruments among the firm's material entities is an 
important element of this advanced planning to reduce uncertainty and 
enable timely recapitalization consistent with an SPOE resolution 
strategy. Accordingly, the agencies are finalizing guidance that 
includes RCAP expectations for firms that adopt an SPOE strategy.
    For firms that adopt an MPOE resolution strategy, the agencies did 
not propose further expectations concerning capital and asked a 
question about whether capital-related expectations should be applied. 
In response, one commenter agreed with the proposal that additional 
expectations are not warranted for firms using an MPOE resolution 
strategy, arguing that such expectations would serve no purpose. 
However, another commenter contended that it is not prudent to assume 
that material entities within a holding company structure can be wound 
down in an orderly manner and that, at a minimum, capital plans are 
needed for each material entity to preserve its value during the 
transition period between a firm's failure and when it can be sold or 
closed in an orderly way. The commenter asked the agencies to 
reconsider expectations for firms that adopt an MPOE resolution 
strategy and align them with expectations for firms that adopt an SPOE 
resolution strategy.
    The agencies have determined that additional capital expectations 
for firms selecting an MPOE resolution strategy are not necessary at 
this time. Under an MPOE resolution strategy, most material entities do 
not continue as going concerns upon the firm's entry into resolution 
proceedings and are likely to have already depleted existing capital. 
Accordingly, the agencies are finalizing this section as proposed.

D. Liquidity

    For firms that adopt an SPOE resolution strategy, the agencies 
proposed liquidity expectations substantially similar to those in the 
2019 U.S. GSIB Guidance. A firm's ability to reliably estimate and meet 
its liquidity needs prior to, and in, resolution is important to the 
execution of a firm's resolution strategy because it enables the firm 
to respond quickly to demands from stakeholders and counterparties, 
including regulatory authorities in other jurisdictions and financial 
market utilities. Maintaining sufficient and appropriately positioned 
liquidity also allows subsidiaries to continue to operate while the 
firm is being resolved in accordance with the firm's preferred 
resolution strategy. For firms that adopt an MPOE resolution strategy, 
the agencies proposed that a firm should have the liquidity 
capabilities necessary to execute its preferred resolution strategy, 
and its plan should include analysis and projections of a range of 
liquidity needs during resolution.
    The agencies received several comments on the liquidity section of 
the proposed guidance. One commenter supported including RLAP 
expectations in the final guidance for firms that adopt an SPOE 
resolution strategy, while another commenter requested that the 
agencies remove RLAP from the final guidance. The second commenter 
argued that RLAP expectations are not appropriate due to the 
comparatively simple legal entity structures and reduced risk profiles 
of the firms subject to the proposed guidance. The commenter also 
claimed that RLAP would be redundant to certain regulatory 
requirements, such as the Liquidity Coverage Ratio (LCR) and Internal 
Liquidity Stress Testing (ILST).
    Another commenter requested that, irrespective of resolution 
strategy, the guidance strengthen expectations for liquidity in 
resolution by including a procedure or protocol for liquidity related 
decisions. The commenter argued that the guidance should affirm the 
importance of overcoming barriers to moving liquidity across material 
legal entities and clarify which types of transfers of liquidity are 
permissible for material entities in resolution.
    After reviewing these comments, the agencies are finalizing this 
section of the guidance largely as proposed, with one clarifying edit 
concerning forecasting maximum operating liquidity and peak funding 
needs. The final guidance clarifies that these forecasts should ensure 
that material entities can operate through resolution, as compared to 
the proposed guidance that provided that the forecasts should ensure 
that material entities can operate after the firm files for bankruptcy.
    RLAP expectations are not addressed by ILST and other regulatory 
requirements. Maintaining sufficient

[[Page 66394]]

and appropriately positioned liquidity is critical to executing an SPOE 
resolution strategy, regardless of the size and complexity of the 
banking organization. The LCR and ILST requirements that commenters 
referenced serve a different purpose--to promote resilience of firms' 
funding profiles--and are not focused on resolution planning.
    Finally, the agencies are not establishing expectations regarding 
procedures or protocols for liquidity-related decisions and the types 
of transfers of liquidity that are permissible for material entities in 
resolution for firms that adopt a MPOE resolution strategy. The Rule 
already includes requirements for firms to include detailed 
descriptions of funding and liquidity needs and resources of material 
entities, and to identify interconnections and interdependencies 
related to liquidity arrangements.\34\ Beyond the assumptions specified 
in the final guidance related to liquidity, additional details of how 
each firm provisions liquidity in the lead up to and during resolution 
are not needed at this time. Furthermore, firms should follow 
procedures and protocols that are aligned with their larger liquidity 
management frameworks to facilitate their preferred resolution 
strategies.
---------------------------------------------------------------------------

    \34\ 12 CFR 243.5(c)(1)(iii) and (g) and 381.5(c)(1)(iii) and 
(g).
---------------------------------------------------------------------------

E. Governance Mechanisms

    The agencies proposed governance mechanisms expectations for 
domestic firms that use an SPOE resolution strategy. These firms would 
have been expected to develop an adequate governance structure with 
triggers that identify the onset, continuation, and increase of 
financial stress to ensure that there is sufficient time to prepare for 
resolution-related actions. The agencies did not propose governance 
mechanisms expectations for domestic firms contemplating an MPOE 
resolution strategy, as entry of certain types of material entities 
into resolution would be determined by criteria prescribed in statute 
or dependent to some extent on actions taken by regulatory authorities 
in implementing a statute. The agencies requested comment on whether to 
apply additional governance mechanisms expectations to domestic firms 
contemplating an MPOE resolution strategy. Some commenters called for 
the agencies to apply similar governance mechanisms expectations 
regardless of a firm's preferred resolution strategy, arguing that many 
aspects of resolution planning are the same or similar for MPOE and 
SPOE resolution strategies.
    One commenter also encouraged the agencies to adopt expectations 
that firms articulate their internal legal strategy, processes for 
making key decisions, and roles and responsibilities leading up to and 
after a material entity of a firm using an MPOE resolution strategy 
enters bankruptcy. Another commenter claimed that governance mechanisms 
are needed for domestic MPOE filers to preserve the value of each 
material entity during the transition period between failure and 
orderly resolution. However, another commenter argued that final 
guidance should not include governance mechanisms expectations for 
domestic MPOE filers as such expectations would not meaningfully 
improve resolvability.
    After review and consideration of these comments, the agencies are 
finalizing this section of the guidance largely as proposed, with one 
clarification applicable only to firms that adopt an SPOE strategy. The 
proposed guidance provided that a firm can reproduce a legal analysis 
that was submitted in a prior plan submission, and that the firm should 
build upon the analysis. The final guidance clarifies that the agencies 
expect that a firm that relies upon a previously submitted analysis 
ensure it remains accurate and up to date. While there is a general 
obligation for firms to submit plans that contain accurate information, 
the agencies are providing this clarification due to the agencies' 
experience that certain legal matters in some resolution plan 
submissions have been outdated.
    Regarding firms that adopt an MPOE strategy, the agencies are 
finalizing this section of the guidance as proposed. Under an MPOE 
resolution strategy, certain material entities' entry into resolution 
is typically determined by or dependent on the actions of supervisory 
and resolution authorities. Adopting expectations for triggers, 
playbooks, pre-bankruptcy support, internal legal strategy, processes 
for making key decisions, and roles and responsibilities for domestic 
triennial full filers adopting an MPOE resolution strategy, with their 
present operations, activities, and structures, would not meaningfully 
improve the resolvability of the specified firms. Accordingly, the 
final guidance does not contain governance mechanisms expectations for 
those firms.

F. Operational

    For firms that adopt an SPOE resolution strategy, the agencies 
proposed aspects of the operational expectations of the 2019 U.S. GSIB 
Guidance and SR letter 14-1,\35\ with modifications based on the 
specific characteristics and complexities of the specified firms. Like 
the 2019 U.S. GSIB Guidance, the proposal contained expectations on 
managing, identifying, and valuing collateral; management information 
systems (MIS); and shared and outsourced services. For firms that adopt 
an MPOE resolution strategy, the agencies proposed operational 
expectations based on SR letter 14-1 and the 2019 U.S. GSIB Guidance 
that are limited to those most relevant to an MPOE resolution strategy. 
As noted in the proposal, development and maintenance of operational 
capabilities is important to support and enable execution of a firm's 
preferred resolution strategy, including providing for the continuation 
of identified critical operations and preventing or mitigating adverse 
effects on U.S. financial stability.
---------------------------------------------------------------------------

    \35\ SR letter 14-1, ``Principles and Practices for Recovery and 
Resolution Preparedness'' (Jan. 24, 2014), available at: https://www.federalreserve.gov/supervisionreg/srletters/sr1401.htm.
---------------------------------------------------------------------------

    The agencies received two comments on the proposed guidance. One 
comment argued that the proposed guidance's expectation that MPOE firms 
remediate vendor arrangements to support continuity of shared and 
outsourced services is overbroad. The commenter asserted that this 
expectation is inappropriate for MPOE firms that mostly receive 
external services through their IDIs because termination of such vendor 
contracts due to ipso facto clauses would be stayed by the FDI Act,\36\ 
and as many firms include resolution-resilient terms in vendor 
contracts when those contracts undergo periodic review and renewal. The 
commenter recommended that the Agencies specify that this expectation 
would apply only to contracts not covered by the FDI Act stay. Another 
commenter contended that firms with limited payment, clearing, and 
settlement (PCS) activities, such as firms without identified critical 
operations related to those activities, should not have to develop the 
same capabilities as firms with more complex PCS activities.
---------------------------------------------------------------------------

    \36\ See 12 U.S.C. 1821(e)(13).
---------------------------------------------------------------------------

    After review and consideration of these comments, the agencies are 
finalizing this area of the guidance with three clarifications 
applicable only to firms that adopt an SPOE strategy, and one 
modification applicable to firms with either preferred resolution 
strategy. First, the proposed guidance for firms that adopt an SPOE 
strategy stated that a firm should maintain a fully

[[Page 66395]]

actionable implementation plan to ensure the continuity of shared 
services that support identified critical operations or core business 
lines. Implied in the concept of supporting identified critical 
operations or core business lines is the notion that a firm would need 
to be able to execute its resolution strategy. Accordingly, the final 
guidance for firms that adopt an SPOE strategy explicitly states that a 
firm's implementation plan to ensure continuity of shared services 
should include those services that are material to the execution of the 
firm's resolution strategy.
    Second, the proposed guidance for firms that adopt an SPOE strategy 
stated that a firm should demonstrate capabilities for continued access 
to PCS services essential to an orderly resolution through a framework 
to support such access and the provided elements of such a framework. 
The agencies note that prior instances of resolution plan guidance 
contained certain limitations on similar PCS framework 
expectations,\37\ and the final guidance adopts that language to 
clarify the scope of said expectations.
---------------------------------------------------------------------------

    \37\ 2020 FBO Guidance at 85 FR 83572-73.
---------------------------------------------------------------------------

    Third, the proposed PCS guidance for firms that adopt an SPOE 
strategy contained several references to ``various currencies.'' The 
agencies note that in the finalization of the 2020 FBO Guidance, the 
agencies revised similar language in response to a comment requesting 
that certain aspects of that guidance be made consistent with 
international expectations.\38\ The final guidance is adopting the 
language from the 2020 FBO Guidance for that same reason.
---------------------------------------------------------------------------

    \38\ See 2020 FBO Guidance at 85 FR 83566.
---------------------------------------------------------------------------

    Additionally, the agencies recognize that firms anticipate relying 
on external parties for the execution of some aspects of the resolution 
strategy, and the proposal included and the final guidance maintains 
the expectation that a firm identify and support the continuity of 
outsourced services that support critical operations or are material to 
the execution of the preferred resolution strategy. Such outsourced 
services that firms may rely on could be employing outside bankruptcy 
counsel and consultants to help prepare documents needed to file for 
bankruptcy, and to represent the firm during the course of the 
bankruptcy proceedings. The agencies expect that covered companies 
engage in advance planning to help facilitate their ability to complete 
all filings, motions, supporting declarations and other documents to 
prepare for and file an orderly resolution in bankruptcy. In 
recognition of this expectation, the final guidance states that--
regardless of strategy--those professionals' services could be material 
to the execution of a firm's preferred resolution strategy and, if so, 
should be accounted for in the firm's resolution plan. Accordingly, the 
agencies expect that firms should prepare during business-as-usual to 
ensure they can complete and file all documents needed to initiate 
their preferred resolution strategy.
    The other aspects of this section of the guidance are being 
finalized as proposed. The comment addressing contract remediation 
correctly observes that the FDI Act permits the FDIC as receiver of a 
failed IDI to enforce contracts with that IDI notwithstanding any 
provisions in the contract permitting termination due to insolvency or 
appointment of the receiver. However, it is advantageous for contracts 
that support identified critical operations or that are material to the 
execution of the resolution strategy to not purport to permit 
termination. Counterparties may not be aware of the receiver's 
authority under the FDI Act to enforce such agreements, potentially 
requiring the receiver to seek authority from a court to compel the 
counterparty's performance, which could lead to interruption of 
identified critical operations and capabilities needed to execute the 
resolution strategy. Further, counterparties located overseas may not 
recognize the authority afforded the receiver to compel the performance 
of contracts. The agencies recognize that contract remediation is an 
ongoing process and encourage firms to make such changes proactively.
    Regarding PCS activities, as discussed elsewhere,\39\ the Agencies 
note that the level of detail provided in a firm's plan should be both 
consistent and commensurate with the firm's risk and activities.
---------------------------------------------------------------------------

    \39\ See infra section III.K of this document.
---------------------------------------------------------------------------

G. Legal Entity Rationalization and Separability

    For domestic banking organizations that adopt an SPOE resolution 
strategy, the agencies proposed adopting legal entity rationalization 
(LER) and separability expectations from the 2019 U.S. GSIB Guidance. 
The LER expectations explained that a firm's legal structure should 
support the firm's preferred resolution strategy, including by: 
facilitating the recapitalization and liquidity support of material 
entities; facilitating the sale, transfer, or wind-down of certain 
discrete operations; adequately protecting the subsidiary IDIs from 
risks arising from the activities of any nonbank subsidiaries of the 
firm; and minimizing complexity that could impede an orderly 
resolution. The separability expectations outlined that a firm should 
identify discrete operations that could be sold or transferred in 
resolution, with the objective of providing optionality in resolution, 
including via a detailed separability analysis that addresses 
divestiture options, execution plans, and impact assessments.
    For domestic banking organizations using an MPOE resolution 
strategy, the agencies proposed LER and separability expectations that 
are reduced as compared to those contained in the 2019 U.S. GSIB 
Guidance. The LER expectations clarified that the firm should consider 
various factors and describe in its plan how the legal entity structure 
aligns core business lines and any identified critical operations with 
the firm's material entities, as well as any cases where a material 
entity IDI relies on an affiliate that is not the IDI's subsidiary 
during resolution. The separability expectations explained that a firm 
should include options for the sale, transfer, or disposal of 
significant assets, portfolios, legal entities, or business lines in 
resolution and provide supporting analysis, including an execution 
plan, identification of any impediments and mitigants, a financial 
impact assessment, and an identified critical operation impact 
assessment.
    The agencies received one comment on the LER and separability 
guidance for domestic banking organizations. The commenter contended 
that separability analysis is inappropriate for businesses and legal 
entities that would be wound down in resolution, as it may not be 
feasible to sell or otherwise transfer such businesses, and that 
separability analysis would not enhance resolvability. The commenter 
further claimed that many elements of the separability analysis may not 
be appropriate for firms that are not active in the investment banking 
space or lack large mergers and acquisitions teams.
    After consideration of the comment received, the agencies are 
issuing legal entity rationalization guidance for both SPOE and MPOE 
firms. LER criteria enhance an orderly resolution by promoting in 
business-as-usual a corporate structure that supports a firm's 
preferred resolution strategy. The agencies are retaining these 
expectations, in part, to encourage firms to consider resolution 
implications of changes to corporate structure, including from future 
growth or mergers and acquisitions. For firms with SPOE

[[Page 66396]]

resolution strategies, the agencies continue to encourage the firms to 
develop and apply LER criteria to facilitate the sale, transfer, or 
wind-down of certain discrete operations within a timeframe that would 
meaningfully increase the likelihood of orderly resolution. The 
agencies continue to encourage firms using MPOE resolution strategies 
to consider potential sales, transfers, and wind-downs during 
resolution as they maintain their legal entity structures.
    However, the separability section of guidance is not needed at this 
time for the specified firms due to their current corporate structures 
and other separability-related expectations. Most of the specified 
firms have three or fewer material entities, with the overwhelming 
majority of their assets concentrated in their IDIs. In addition, the 
Rule requires firms to address the feasibility and impact of sales or 
divestitures and the final LER guidance contains separability-related 
expectations. The agencies may consider the need for firm-specific 
separability expectations in the future for specified firms that 
substantially increase their non-bank activities or change in a way 
such that separability becomes critical to their resolvability.
    Finally, the agencies moved the description of their expectation on 
governance processes from the proposed separability section to the LER 
section of the final guidance text.

H. Insured Depository Institution Resolution

Background
    In the proposal, the agencies provided clarifying expectations as 
to how a firm adopting an MPOE resolution strategy with a material 
entity IDI should explain how the IDI can be resolved under the FDI Act 
in a manner that is consistent with the overall objectives of the 
resolution plan. In particular, the proposed expectations for IDI 
resolution were designed to support the resolution plans' effectiveness 
in substantially mitigating the risk that the failure of the specified 
firm would have serious adverse effects on financial stability in the 
United States, while also adhering to the legal requirements of the FDI 
Act without relying on the assumption that the systemic risk exception 
will be invoked in connection with the resolution of the firm. For 
example, the agencies proposed clarifying that if a firm adopting an 
MPOE resolution strategy selects an IDI resolution strategy other than 
a payout liquidation, the firm's plan should provide information 
supporting the feasibility of the firm's selected strategy, although 
such a feasibility analysis need not consist of a full FDI Act least-
cost requirement analysis. The agencies proposed that a firm could 
instead provide a more limited analysis. The proposal noted that the 
same expectations would not be applicable to firms adopting an SPOE 
resolution strategy because the U.S. IDI subsidiaries of such firms 
would not be expected to enter resolution.
    The agencies received a number of comments on the proposed guidance 
related to the resolution of a subsidiary material entity U.S. IDI. 
Some commenters requested additional clarity on how the firm's plan 
should address the expectation that the plan include an analysis of how 
the resolution strategy could potentially meet the FDIC's statutory 
least-cost requirement. One commenter suggested that the agencies 
should require firms to develop resolution strategies involving BDIs. 
This commenter recommended that the guidance address how firms could 
describe and quantify the value of the firm's assets transferred to 
such a BDI, and that the agencies should provide guidance so that firms 
would address how the resolution plan would incorporate the value of 
the IDI's assets and liabilities, including its franchise value, and 
how the preferred resolution strategy would result in a least-costly 
resolution. The commenter also recommended that firms and regulators 
reach agreement on certain assumptions regarding valuations.
    Another commenter argued that firms adopting an MPOE strategy 
should not be expected to demonstrate that their preferred strategy 
would be consistent with the FDIC's statutory least-cost requirement. 
This commenter stated that efforts to conduct a hypothetical least-cost 
requirement analysis, or a proxy for that analysis, would be of no or 
minimal value to the FDIC in an actual resolution event. The commenter 
claimed that it would not be possible to conduct a least-cost test 
requirement analysis in a resolution plan submission in the absence of 
actual bids from actual buyers. Instead, the commenter recommended that 
the guidance provide expectations for how firms selecting an MPOE 
strategy could demonstrate their valuation capabilities. The commenter 
also suggested that because a least-cost requirement analysis is not a 
component of the Proposed IDI Rule, it also should not be a component 
of the guidance. This commenter requested sufficient time to address 
any finalized guidance that provides expectations for including least-
cost requirement analysis.
    Several commenters suggested that the Proposed IDI Rule is a better 
forum to address how the IDI subsidiary of a specified firm selecting 
an MPOE strategy can be resolved under the FDI Act in a manner that is 
consistent with the FDI Act. A commenter also suggested that the 
agencies' expectations for resolution plan submissions under the Rule 
should align with the requirements of the FDIC's IDI Rule plan 
submissions.
    When an IDI fails and the FDIC is appointed receiver, the FDIC 
generally must use the resolution option for the failed IDI that is 
least costly to the DIF of all possible methods (the least-cost 
requirement).\40\ A resolution plan that contemplates the separate 
resolution of a U.S. IDI that is a material entity and the appointment 
of the FDIC as receiver for that IDI should explain how the resolution 
could be achieved in a manner that adheres to applicable law, including 
the FDI Act, and that would achieve the overall objectives of the 
resolution plan. Prior resolution plans that have addressed the 
resolution of the IDIs in MPOE strategies have sometimes included 
resolution mechanics that are not consistent with the FDI Act, 
including inappropriate assumptions that uninsured deposits could 
automatically be transferred to a BDI.
---------------------------------------------------------------------------

    \40\ See 12 U.S.C. 1823(c)(4)(A). A deposit payout and 
liquidation of the failed IDI's assets (payout liquidation) is the 
general baseline the FDIC uses in a least-cost requirement 
determination. See 12 U.S.C. 1823(c)(4)(D). An exception to this 
requirement exists when a determination is made by the Secretary of 
the Treasury, in consultation with the President and after a written 
recommendation from two-thirds of the FDIC's Board of Directors and 
two-thirds of the Board, that complying with the least-cost 
requirement would have serious adverse effects on economic 
conditions or financial stability and implementing another 
resolution option would avoid or mitigate such adverse effects. See 
12 U.S.C. 1823(c)(4)(G). A specified firm should not assume the use 
of this systemic risk exception to the least-cost requirement in its 
resolution plan.
---------------------------------------------------------------------------

    Separate and distinct from the Rule, the FDIC has a regulation, the 
IDI Rule, requiring certain IDIs (covered IDIs or CIDIs) to submit to 
the FDIC resolution plans providing information about how the CIDI can 
be resolved under the FDI Act. Contemporaneous with publication of the 
proposed guidance, the FDIC published in the Federal Register the 
Proposed IDI Rule, a proposed rulemaking to amend and restate the IDI 
Rule, which has since been finalized and was published in the Federal 
Register on July 9, 2024.
    The IDI Rule and the Rule each have different goals, and, 
accordingly, the expected content of the respective resolution plans is 
different. The purpose of the IDI Rule is to ensure that

[[Page 66397]]

the FDIC has access to the information it needs to resolve a CIDI 
efficiently in the event of its failure, including an understanding of 
the CIDI's ability to produce the information the FDIC would need to 
conduct a least-cost determination under a wide range of circumstances.
    The Rule serves a different purpose. The Rule requires a covered 
company to submit a resolution plan that would allow rapid and orderly 
resolution of the firm under the Bankruptcy Code in the event of 
material financial distress or failure. The regional bank failures in 
March 2023 demonstrated that banking organizations of size and 
complexity similar to that of the specified firms--or even smaller and 
less complex banking organizations--can be disruptive to U.S. financial 
stability. In the case of Silicon Valley Bank and Signature Bank, 
uninsured depositors would have faced the potential for significant 
losses had the least costly approach to resolution, a payout 
liquidation, been adopted. The potential for contagion from the deposit 
runs at the firms that failed, as well as related potential for risks 
to the economy and financial stability, led the Secretary of the 
Treasury, in consultation with the President and after a written 
recommendation from the FDIC's Board of Directors and the Board, to 
invoke the systemic risk exception to enable the FDIC to resolve these 
institutions in a way that would avoid or mitigate serious adverse 
effects on economic conditions or financial stability. Though a 
specified firm would be conducting its analysis without input in the 
form of actual bids from potential buyers, the agencies expect firms to 
use available information to estimate the value of its franchise for 
purposes of conducting the limited least-cost analysis articulated in 
the guidance.
    If a firm's resolution plan under the Rule that includes an MPOE 
strategy calls for resolving an IDI using a strategy other than payout 
liquidation, the plan should explain how the requirements of the FDI 
Act could be met without depending upon extraordinary government 
support. Even though this analysis is not binding in an actual 
resolution scenario, an analysis showing that the firm's preferred 
resolution strategy could satisfy requirements of the FDI Act could 
help the firm demonstrate that the resolution plan's preferred strategy 
could be executed in a manner consistent with applicable law. If a 
resolution plan does not provide such an explanation, it may be 
appropriate to conclude that the strategy would not satisfy the FDI 
Act's relevant provisions, such as the least-cost requirement, which 
could represent a weakness in the plan. As a general matter, the 
agencies followed this practice in reviewing previous full resolution 
plan submissions.
    Guidance. In response to commenters, the agencies are providing 
additional detail to help address commenters' questions related to the 
FDI Act's least-cost requirement and how it relates to the expectations 
in this final guidance. The final guidance does not express a change in 
the agencies' expectations. Instead, the final guidance provides more 
detail on approaches a firm can use to explain how the resolution of 
its IDI subsidiary can be achieved in a manner that substantially 
mitigates the risk that the firm's failure would have serious adverse 
effects on U.S. financial stability while also complying with the 
statutory and regulatory requirements governing IDI resolution. The 
final guidance lists a number of different common strategies for 
resolving an IDI and describes the kind of information that a firm 
could provide to explain how a resolution using one of the example 
strategies could be consistent with the least-cost requirement. The 
final guidance also provides information about calculating the value of 
an IDI's assets and its franchise value. Finally, the final guidance 
explicitly notes that the agencies are not expecting a firm to provide 
a complete least-cost analysis.
Strategies for Resolving an IDI
    Purchase and Assumption Transaction. The FDIC typically seeks to 
resolve a failed IDI by identifying, before the IDI's failure, one or 
more potential acquirers so that as many of the IDI's assets and 
deposit liabilities as possible can be sold to and assumed by the 
acquirer(s) instead of remaining in the receivership created on the 
failure date.\41\ This transaction form, termed a purchase and 
assumption or P&A transaction, has often been the resolution approach 
that is least costly to the DIF, and is usually considered the easiest 
for the FDIC to execute and the least disruptive to the depositors of 
the failed IDI--particularly in the case of transactions involving the 
assumption of all the failed IDI's deposits by the assuming institution 
(an all-deposit transaction).
---------------------------------------------------------------------------

    \41\ See generally https://www.fdic.gov/resources/resolutions/bank-failures/ for background about the resolution of IDIs by the 
FDIC.
---------------------------------------------------------------------------

    The limited size and operational complexity present in most small-
bank failures have been significant factors in allowing the FDIC to 
execute P&A transactions with a single acquirer on numerous occasions. 
Resolving an IDI via a P&A transaction over the closing weekend, 
however, has not always been available to the FDIC, particularly in 
failures involving large IDIs. P&A transactions require lead time to 
identify potential buyers and allow due diligence on, and an auction 
of, the failing IDI's assets and banking business, also termed its 
franchise. The acquiring banks must also have sufficient excess capital 
to absorb the failed IDI's assets and deposit franchise, sufficient 
expertise to manage business integration, and the ability to comply 
with several legal requirements. Larger failed banks can pose 
significant, and potentially systemic, challenges in resolutions that 
make a P&A transaction less viable. These challenges include: a more 
limited pool of potential acquirers as a failed IDI increases in size; 
operational complexities that require lengthy advance planning on the 
part of the IDI and the FDIC; the development of certain expertise; 
potential market concentration and antitrust considerations; and 
potentially the need to maintain the continuity of activities conducted 
in whole or in part in the IDI that are critical to U.S. financial 
stability.
    Alternative Resolution Strategies. If no P&A transaction that meets 
the least-cost requirement can be accomplished at the time an IDI 
fails, the FDIC must pursue an alternative resolution strategy. The 
primary alternative resolution strategies for a failed IDI are (1) a 
payout liquidation, or (2) utilization of a BDI.
    Payout Liquidation. The FDIC conducts payout liquidations by paying 
insured deposits in cash or transferring the insured deposits to an 
existing institution or a new institution organized by the FDIC to 
assume the insured deposits (generally, a Deposit Insurance National 
Bank or DINB). In payout liquidations, the FDIC as receiver retains 
substantially all of the failed IDI's assets for later sale, and the 
franchise value of the failed IDI is lost. A payout liquidation is 
often the most costly and disruptive resolution strategy because of 
this destruction of franchise value and the FDIC's direct payment of 
insured deposits.
    Bridge Depository Institution. If the FDIC determines that 
temporarily continuing the operations of the failed IDI is less costly 
than a payout liquidation, the FDIC may organize a BDI to purchase 
certain assets and assume certain liabilities of the failed IDI.\42\ 
Generally, a BDI would continue

[[Page 66398]]

the failed bank's operations according to business plans and budgets 
approved by the FDIC and carried out by FDIC-selected BDI leadership. 
In addition to providing depositors continued access to deposits and 
banking services, the BDI would conduct any necessary restructuring 
required to rationalize the failed IDI's operations and maximize value 
to be achieved in an eventual sale. Subject to the least-cost 
requirement, the initial structure of the BDI may be based upon an all-
deposit transaction, a transaction in which the BDI assumes only the 
insured deposits, or a transaction in which the BDI assumes all insured 
deposits and a portion of the uninsured deposits. Once a BDI is 
established, the FDIC seeks to stabilize the institution while 
simultaneously planning for the eventual exit and termination of the 
BDI. In exiting and terminating a BDI, the FDIC may merge or 
consolidate the BDI with another depository institution, issue and sell 
a majority of the capital stock in the BDI, or effect the assumption of 
the deposits or acquisition of the assets of the BDI.\43\ While 
utilizing a BDI can avoid the negative effects of a payout liquidation, 
such as destruction of franchise value, many of the same factors that 
challenge the feasibility of a traditional P&A transaction also 
complicate planning for the termination of a BDI through a sale of the 
whole entity or its constituent parts.
---------------------------------------------------------------------------

    \42\ Before a BDI may be chartered, the chartering conditions 
set forth in 12 U.S.C. 1821(n)(2) must also be satisfied. For 
purposes of this guidance, if the Plan provides appropriate analysis 
concerning the feasibility of the BDI strategy, there is no 
expectation that the resolution plan also demonstrate separately 
that the conditions for chartering the BDI have been satisfied.
    \43\ 12 U.S.C. 1821(n)(10).
---------------------------------------------------------------------------

    Though one commenter suggested that the guidance should require 
firms to develop resolution strategies involving BDIs, the agencies do 
not maintain an expectation that firms will develop resolution 
strategies involving BDIs. The expectations provided in this guidance 
are also intended to be helpful to firms that have chosen to involve a 
BDI in their resolution strategy.
    Least-Cost Analysis for Resolution Plans. The final guidance does 
not include an expectation that firms provide in their resolution plans 
a complete least-cost analysis. Such an analysis would, for example, 
include a comparison of the preferred strategy for resolving an IDI 
that is a material entity against every other possible resolution 
method. While a firm may choose to provide a complete least-cost 
analysis, this guidance discusses expectations regarding a limited 
least-cost analysis that would explain how the firm's preferred 
strategy is not more costly than a payout liquidation and, if 
applicable, an insured-only BDI.
    One commenter suggested that the agencies should provide guidance 
for how firms should address the valuation of an IDI's assets and 
liabilities, including its franchise value. In this final guidance, the 
agencies are providing additional explanation for how firms can develop 
and support the valuation of the IDI's assets and liabilities in an IDI 
resolution. This guidance includes a description of how firms can 
assess the franchise value of a firm's business.
    Example. The following example should be read in conjunction with 
section VIII of the guidance text, Insured Depository Institution 
Resolution. This example is only intended to provide firms with an 
illustration of the types of considerations and calculations that could 
be included in a firm's analysis explaining how its preferred strategy 
would be less costly than a payout liquidation and, if applicable, an 
insured-only BDI. This example is not intended to serve as a template 
for firms or to provide guidelines for reasonable valuations of a 
firm's assets or liabilities. The valuations described in this example 
are intended to be illustrative and are not guidance about the likely 
values of a firm's assets and liabilities in an individual resolution 
plan or in resolution.
    Bank A has $500 billion in total assets, consisting of $250 billion 
loans; $75 billion cash and equivalents; $125 billion in investment 
securities; and other assets totaling $50 billion. The bank's initial 
funding structure consists of $400 billion in deposits; $25 billion in 
various unsecured payables and debt; $25 billion in secured funding; 
and $50 billion in capital instruments. For this example, the bank 
assumes it would encounter idiosyncratic events at a time when severely 
adverse economic conditions are present, and this combination of events 
would cause the bank to be closed by the chartering authority and the 
FDIC appointed as receiver. The illustrative tables below reflect 
values as of the appointment of the FDIC as receiver.
    The initial events combine to cause immediate losses of $25 billion 
recognized as direct operating charges and $15 billion through write-
downs/provision expense for the loan portfolio, and $60 billion of 
deposit runoff occurs.
     For purposes of conducting the analysis, the firm's 
management assumes that additional value diminution is present in the 
loan portfolio. Accordingly, after thoroughly analyzing the quality of 
its loan portfolio and determining the potential for additional credit 
losses, as well as considering the market value of the loan portfolio 
based upon the type of loans it holds in comparison with comparable 
sales transactions, and after further considering sensitivity testing, 
management supports an estimate near $175 billion for the loan 
portfolio.
     In developing its Resolution Plan, the firm's management 
further supports that $40 billion of additional deposit runoff would 
occur in addition to the initial $60 billion. At the time of failure, 
Bank A's remaining $300 billion of deposits are 60 percent insured and 
40 percent uninsured. The ratio of insured deposits to uninsured 
deposits is used to calculate the pro rata recovery of depositors and 
the losses imposed on the DIF as a result.\44\
---------------------------------------------------------------------------

    \44\ See infra note 45.
---------------------------------------------------------------------------

     The deposit runoff is assumed to be met by using $50 
billion of cash and selling $50 billion of investment securities. The 
remaining $75 billion investment portfolio is entirely invested in 
short-term U.S. Treasury securities with an estimated value of $70 
billion.
     The other assets are implicated in the initial 
idiosyncratic loss. These other assets include fixed assets, foreclosed 
property, intellectual property, and miscellaneous items with a market 
value of $25 billion.
     As shown in table 1, the Plan provides an analysis of the 
payout liquidation strategy. This strategy includes an expected loss to 
the DIF of $18 billion.

[[Page 66399]]



                        Table 1--Illustration of Bank A Payout Liquidation--Cost Estimate
                                              [Dollars in billions]
----------------------------------------------------------------------------------------------------------------
             Liquidation market value                 Payout liquidation liability claim and amount recovered
----------------------------------------------------------------------------------------------------------------
             Category                   Value            Category            Claim           Recovery/(loss)
----------------------------------------------------------------------------------------------------------------
Loans............................            $175  Secured Claims.....             $25  $25/($0).
Securities.......................             $70  Deposits Insured...            $180  $162/($18).
                                                  --------------------------------------------------------------
Cash.............................             $25    FDIC incurs the loss for the insured deposits so that all
Other............................             $25                insured deposits are fully repaid.
                                                  --------------------------------------------------------------
    Total........................            $295  Deposits Uninsured.            $120  $108/($12).
                                                   Unsecured Claims/               $25  $0/($25).
                                                    Debt.
                                                   Equity Holders.....  ..............  No recovery.
----------------------------------------------------------------------------------------------------------------
Loss to Deposit Insurance Fund (to make whole insured depositors) = $18 billion.\45\
Losses to uninsured depositors = $12 billion.

     However, the Plan also asserts and supports that the 
payout liquidation approach fails to reflect the franchise value of the 
combined deposit and loan relationships stemming from considerations 
such as the low administrative costs associated with servicing large 
deposits, the elimination of significant customer acquisition costs, 
the stable fee income stream associated with the accounts due to 
barriers to entry for certain products, and the importance and value of 
integrating the loan and deposit products.
---------------------------------------------------------------------------

    \45\ Calculation: (1) $295 billion asset value less secured 
claim of $25 billion = $270 billion available to depositors and 
junior claims; (2) $270 billion available spread pro-rata across 
$300 billion depositor class; 60 percent insured deposits and 40 
percent uninsured deposits; (3) $270 billion x .6 = $162 billion 
paid to insured depositors; $270 billion x .4 = $108 billion paid to 
uninsured depositors.
---------------------------------------------------------------------------

     The Plan calculates, and provides the analysis supporting 
the calculation, that the economic benefit of packaging these benefits 
together in an all-deposit BDI is $20 billion, which is reflected as a 
bid premium to liquidation pricing in table 2.
     The result is that the all-deposit BDI is less costly to 
the DIF than liquidation because of the inclusion of the bid premium.

                        Table 2--Illustration of Bank A Preferred Strategy--Cost Estimate
                                              [Dollars in billions]
----------------------------------------------------------------------------------------------------------------
         All deposit bridge market value            All deposit bridge bank liability claim and amount recovered
----------------------------------------------------------------------------------------------------------------
             Category                   Value            Category            Claim           Recovery/(loss)
----------------------------------------------------------------------------------------------------------------
Loans............................            $175  Secured Claims.....             $25  $25/($0).
Securities.......................             $70  Deposits Insured...            $180  $174/($6).
                                                  --------------------------------------------------------------
Cash.............................             $25    FDIC incurs the loss for the insured deposits so that all
Other............................             $25                insured deposits are fully repaid.
                                                  --------------------------------------------------------------
Sub Total........................            $295  Deposits Uninsured.            $120  $116/($4).*
Bid Premium......................             $20  Unsecured Claims/               $25  $0/($25).
                                                    Debt.
    Total........................            $315  Equity Holders.....  ..............  No recovery.
----------------------------------------------------------------------------------------------------------------
Loss to Deposit Insurance Fund (to make whole insured and uninsured depositors) = $10 billion, which is less
  than the payout liquidation loss.\46\
* Losses to uninsured depositors total $4 billion and are absorbed by the DIF.

I. Derivatives and Trading Activities

    The agencies requested comment on whether to provide derivatives 
and trading activities guidance for specified firms that adopt an SPOE 
or MPOE resolution strategy. Some commenters argued that no derivatives 
and trading guidance is needed for domestic triennial full filers 
because they have limited derivatives and trading portfolios, 
particularly relative to the U.S. GSIB banking organizations covered by 
such guidance. These commenters also noted that not all of these 
biennial filers, which are Category I firms, are subject to this type 
of guidance. Other commenters supported providing such guidance to 
domestic triennial full filers, despite observing that these firms 
engage in less activity than the biennial filers. One commenter 
cautioned that derivatives activities for domestic triennial full 
filers may increase in the future and proposed the inclusion of an 
orderly-wind-down analysis for firms with net derivatives exceeding a 
given threshold. Another commenter recommended that the guidance 
include expectations for: roles and responsibilities in derivatives 
unwind, plan reporting regarding derivatives exposures, plan risk 
assessments in cross-border activity, barriers to swift unwind of 
derivatives activities booked outside the United States, and 
capabilities to generate detailed derivative reports. This commenter 
also argued that firms should specify plans to wind-down between 
affiliates and external

[[Page 66400]]

counterparties, as well as describe potential sale of some trading 
positions.
---------------------------------------------------------------------------

    \46\ Calculation: (1) $315 billion asset value less secured 
claim of $25 billion = $290 billion available to depositors and 
junior claims; (2) $290 billion available spread pro-rata across 
$300 billion depositor class; 60 percent insured deposits and 40 
percent uninsured deposits; (3) $290 billion x .6 = $174 billion 
paid to insured depositors; $290 billion x .4 = $116 billion paid to 
uninsured depositors.
---------------------------------------------------------------------------

    After reviewing the comments and considering the scope of 
derivatives and trading activities of domestic Category I, II, and III 
banking organizations,\47\ the agencies determined that the banking 
organizations that would be specified firms have limited derivatives 
and trading operations compared to the subset of biennial filers that 
are the subject of derivatives and trading guidance. The agencies also 
note that the Rule includes certain requirements regarding derivatives 
and trading activities with which all covered companies--including 
domestic triennial full filers--must comply, as well as the overall 
requirement to provide a strategic analysis describing the covered 
company's plan for orderly resolution.\48\ The agencies believe that 
for this set of covered companies, given their current activities, the 
topic of derivatives and trading activities is sufficiently addressed 
by the Rule. The agencies are therefore finalizing the guidance without 
including expectations on derivatives and trading activity for the 
specified firms.
---------------------------------------------------------------------------

    \47\ See FR Y-15 Systemic Risk Report, 2nd quarter 2023 data. 
Publicly available at the National Information Center, https://www.ffiec.gov/NPW. See also Quarterly Report on Bank Trading and 
Derivatives Activities--Third Quarter 2023. Publicly available at 
https://www.occ.gov/publications-and-resources/publications/quarterly-report-on-bank-trading-and-derivatives-activities/index-quarterly-report-on-bank-trading-and-derivatives-activities.html.
    \48\ See 12 CFR 243.2 and 381.2; 12 CFR 243.5(c) and (e)(6)-(7), 
and 381.5(c) and (e)(6)-(7).
---------------------------------------------------------------------------

    The agencies also recognize that derivatives activity or risk for 
domestic triennial full filers may change in the future. The agencies 
may consider the need for firm-specific derivatives and trading 
expectations in the future for specified firms that substantially 
increase their derivatives and trading activities or change in a way 
such that having a strategy to wind-down their derivatives portfolios 
is critical to their resolvability.

J. Format and Structure of Plans; Assumptions

    This section of the proposal described the agencies' preferred 
presentation regarding the format, assumptions, and structure of 
resolution plans. Under the proposal, plans would have been expected to 
contain an executive summary, a narrative of the firm's resolution 
strategy, relevant technical appendices, and a public section as 
detailed in the Rule. The proposed format, structure, and assumptions 
were generally similar to those in the 2019 U.S. GSIB Guidance, except 
that the proposed guidance reflected the expectations that (a) a firm 
should support any assumptions that it will have access to the Discount 
Window and/or other borrowings during the period immediately prior to 
entering bankruptcy and clarified expectations around such assumptions, 
and (b) a firm should not assume the use of the systemic risk exception 
to the least-cost test in the event of a failure of an IDI requiring 
resolution under the FDI Act. In addition, for firms that adopt an MPOE 
resolution strategy, the proposal included the expectation that a plan 
should demonstrate and describe how the failure event(s) results in 
material financial distress, including consideration of the likelihood 
of the diminution the firm's liquidity and capital levels prior to 
bankruptcy. The proposal also included several questions about 
assumptions and whether to include answers to frequently asked 
questions.
    The agencies received one comment in response to a question posed 
regarding assumptions related to lending facilities, including the 
Discount Window. The commenter supported the proposed assumptions 
guidance regarding these facilities and recommended that the agencies 
consider providing additional guidance on assumptions related to the 
amount, timing, and limitations of liquidity that might become 
available from these sources. However, the additional guidance 
requested by the commenter is unnecessary, and the agencies are 
finalizing this section of the guidance as proposed with one 
clarification. Specifically, the proposed guidance regarding the 
relevant assumptions already includes references to timing and 
limitations of liquidity commensurate with the activities of firms 
subject to the guidance.
    As a clarification, the agencies have added a reference to Federal 
Home Loan Banks (FHLBs) as a type of borrowing for which firms should 
provide support in their resolution plans if they assume access during 
the period immediately prior to entering bankruptcy. The agencies' 
experiences in 2023 showed that many IDIs depend heavily on FHLB 
funding in times of stress and, accordingly, the agencies expect firms 
to be prepared to support any assumptions around such reliance for 
resolution planning purposes.
    The final guidance also includes an expectation contained in the 
2019 U.S. GSIB Guidance and the 2020 FBO Guidance regarding the 
parameters of economic forecasting in a resolution plan submission. 
Those guidance documents stated that a resolution plan should assume 
the Dodd-Frank Act Stress Test (DFAST) severely adverse scenario for 
the first quarter of the calendar year in which a resolution plan is 
submitted is the domestic and international economic environment at the 
time of the firm's failure and throughout the resolution process.\49\ 
While this assumption is similar to a provision in the Rule,\50\ the 
agencies believe it is important to provide guidance to firms about the 
timing of the required assumption in the Rule. The Board provides DFAST 
scenario information to the specified firms through the Board's public 
website.\51\
---------------------------------------------------------------------------

    \49\ 2019 U.S. GSIB Guidance at 84 FR 1459; 2020 FBO Guidance at 
85 FR 83578.
    \50\ 12 CFR 243.4(h)(1) and 381.4(h)(1).
    \51\ https://www.federalreserve.gov/publications/dodd-frank-act-stress-test-publications.htm.
---------------------------------------------------------------------------

    The agencies also received a comment recommending that more of 
firms' resolution plans be disclosed publicly to promote market 
discipline and specifically asking that the public portion of 
resolution plans describe potential acquirers of operations in the 
event of resolution. The Rule establishes at a high-level the required 
content of the public section of a resolution plan,\52\ and this final 
guidance clarifies the agencies' expectations with respect to that 
section. The agencies are mindful that the public disclosure of 
resolution plans, which may contain private commercial information, has 
both benefits and drawbacks, and the agencies believe that, at the 
moment, the Rule--revisions to which are outside the scope of this 
guidance--and the final guidance appropriately balance transparency 
with confidentiality.
---------------------------------------------------------------------------

    \52\ 12 CFR 243.11(c) and 381.11(c).
---------------------------------------------------------------------------

    The agencies are otherwise finalizing this section of the guidance 
as proposed.\53\ The agencies did not receive any comments in response 
to the proposal's request for comments about answers to frequently 
asked questions, and the agencies have not included those prior answers 
to frequently asked questions because these prior answers were 
requested by and prepared for a different set of firms.
---------------------------------------------------------------------------

    \53\ The agencies also are clarifying one expectation in the 
Financial Statements and Projections subsection of the Format and 
Structure of Plans; Assumptions section of the guidance that could 
be construed to impose a requirement on the specified firms.
---------------------------------------------------------------------------

K. Additional Comments

Differentiating Resolution Plan Guidance
    The agencies received several general comments about whether the 
expectations in the proposal were suitably modified from expectations

[[Page 66401]]

included in past resolution plan guidance and whether the proposal 
appropriately distinguished between different types of triennial full 
filers. Several commenters contended that the proposed guidance did not 
sufficiently differentiate expectations among firms subject to 
resolution planning guidance. One commenter argued that section 165 of 
the Dodd-Frank Act requires the agencies to differentiate the content 
of the resolution planning guidance; the proposal was too similar to 
the 2019 U.S. GSIB Guidance; and expectations for the specified firms 
should be further differentiated based on size, risk, and other 
factors. Another commenter argued that the proposed guidance favors the 
MPOE resolution strategy by including fewer expectations for firms that 
adopt that strategy and recommended that final guidance for firms 
adopting an MPOE resolution strategy should be more aligned with 
guidance for resolution plan filers with an SPOE resolution strategy.
    While the differentiation requirement in section 165 of the Dodd-
Frank Act does not apply to this non-binding resolution plan guidance, 
the guidance differentiates among covered companies, taking into 
consideration their size, complexity, and other risk-related factors; 
their resolution strategy, whether SPOE or MPOE; and whether they are 
domestic or foreign-based.
    The thresholds and risk-based indicators that form the basis of the 
risk-based category framework used by the Rule are designed to take 
into account an individual firm's particular activities and 
organizational footprint that may present significant challenges to an 
orderly resolution.\54\ The Rule, using those categories, defines 
triennial full filers as one cohort because the failure of a Category 
II or III banking organization could pose a threat to U.S. financial 
stability. Banking organizations in these two categories often have 
similar characteristics, such as organizational structures, and similar 
resolution strategies that benefit from similar resolution guidance. 
Accordingly, the agencies believe the guidance is equally appropriate 
for domestic Category II and III banking organizations. In addition, as 
discussed above, the regional bank failures in March 2023 demonstrated 
that the failure of banking organizations with $100 billion to $250 
billion in total consolidated assets can be disruptive to U.S. 
financial stability. For these reasons, providing the guidance to 
domestic triennial full filers in that asset range is appropriate to 
prevent or mitigate risks to the financial stability of the United 
States.
---------------------------------------------------------------------------

    \54\ See 2019 Federal Register Rule Publication at 84 FR 59197-
201.
---------------------------------------------------------------------------

    Guidance for specified firms that adopt an SPOE resolution strategy 
is differentiated relative to guidance for Category I banking 
organizations (i.e., the 2019 U.S. GSIB Guidance), notably with the 
absence of derivatives and trading expectations, which are applicable 
to most of the U.S. GSIBs, and other operational guidance as well as 
reduced separability expectations. Other aspects of the SPOE guidance 
are appropriately similar to the 2019 U.S. GSIB Guidance because the 
successful execution of an SPOE resolution strategy benefits from the 
capabilities discussed in the guidance. The guidance for firms that 
adopt an MPOE resolution strategy includes substantially simpler 
expectations, relative to SPOE guidance and the 2019 U.S. GSIB 
Guidance, in the areas of capital, liquidity, governance mechanisms, 
operational, legal entity rationalization and separability, derivatives 
and trading expectations, and PCS. Having simpler expectations relative 
to SPOE guidance does not necessarily mean a firm adopting an MPOE 
strategy will encounter fewer challenges developing its resolution 
plan; regardless of the strategy chosen, the firm is responsible for 
providing adequate information and analysis to demonstrate its plan 
will facilitate an orderly resolution. Each firm remains free to choose 
the resolution strategy it believes would most effectively facilitate 
an orderly resolution, and the agencies are not suggesting that any 
firm change its resolution strategy, nor do the agencies identify a 
preferred strategy for a specific firm or set of firms.\55\
---------------------------------------------------------------------------

    \55\ See infra section I.A, Resolution Plan Strategy, of this 
document for further discussion about why the agencies are 
differentiating expectations depending on whether a firm adopts an 
SPOE or MPOE resolution strategy.
---------------------------------------------------------------------------

    Finally, resolution plan guidance for Category II and III banking 
organizations is adapted to whether a covered company is based in the 
United States or in a foreign jurisdiction, with dedicated guidance 
documents for each type of firm. The Rule differentiates between 
banking organizations based on home jurisdiction,\56\ and whether a 
banking organization is based in the United States can significantly 
impact its resolution strategy, resolution capabilities, and resolution 
planning. Accordingly, expectations for domestic and foreign-based 
triennial full filers are differentiated in the areas of capital, 
liquidity, governance mechanisms, shared services, separability, 
branches, and group-wide resolution plans.
---------------------------------------------------------------------------

    \56\ See 12 CFR 243.5(a) and 381.5(a).
---------------------------------------------------------------------------

Comments About Resolution Planning and the Proposal
    The agencies received several general comments about resolution 
planning guidance. The agencies have considered these commenters' input 
but have made no modifications to the final guidance.
    One commenter expressed support for the proposed guidance, in part, 
because it reaffirms that bankruptcy is the preferred resolution 
strategy and would improve the quality of resolution plan submissions 
through enhanced information and assumptions, better enabling the 
resolution of a specified firm in an orderly manner. Another commenter 
praised the agencies' proposal for providing needed clarity and 
transparency on expectations for specified firms' resolution plans, and 
for making several improvements that will improve specified firms' 
resolution plans.
    Another commenter recommended that the agencies adopt the content 
of the guidance in the form of a legally binding and enforceable rule, 
in part due to the size and scope of specified firms, the importance of 
resolution planning, and the financial stability implications involved. 
This commenter also suggested that the large bank failures in 2023 
demonstrated the need for improvement in banking organizations' 
resolution planning and the agencies' process for assessing these 
plans.
    Resolution planning is important to U.S. financial stability; 
however, the agencies have not made changes to the guidance in response 
to these comments. The Rule, which is legally enforceable, identifies 
the specific topics that must be addressed in resolution plans. In 
contrast, resolution plan guidance outlines the agencies' supervisory 
expectations and priorities and articulates the agencies' general views 
regarding appropriate resolution planning practices for the specified 
firms. The final guidance provides examples of resolution plan content 
and capabilities that the agencies generally consider consistent with 
effective resolution planning. This approach is consistent with 
resolution planning guidance provided to other covered companies in the 
past, including guidance for Category I banking organizations and 
certain foreign Category II banking organizations.
    A commenter argued that the agencies should allow for an iterative 
process for domestic triennial full filers to develop their strategies 
and capabilities, similar to the gradual maturation of Category I

[[Page 66402]]

banking organizations' resolution plans. This commenter also argued the 
agencies should provide more than one year for firms to incorporate the 
final guidance into their next resolution plan submissions and that the 
guidance should not be the basis for a deficiency.
    By statute and under the Rule, each resolution plan filer must 
submit a plan for orderly resolution under the Bankruptcy Code, and the 
agencies must assess the credibility of each plan. Each firm remains 
free to choose the resolution strategy it believes would most 
effectively facilitate an orderly resolution and the agencies are not 
suggesting that any firm change its resolution strategy, nor do the 
agencies identify a preferred strategy for a specific firm or set of 
firms. The standard of review for a resolution plan submission of a 
firm that transitions to a new strategy is the same as for any firm 
subject to the Rule. The agencies stated in the preamble to the 2019 
revisions to the Rule that they would endeavor to finalize guidance a 
year in advance of the next applicable resolution plan submission date, 
and the agencies are extending the next resolution plan submission 
deadline for these firms to provide at least one year advanced notice 
of general guidance.\57\ The agencies also reaffirm that the guidance 
does not have the force and effect of law, and the agencies do not take 
enforcement actions or issue findings based on resolution planning 
guidance.
---------------------------------------------------------------------------

    \57\ See 2019 Federal Register Publication at 84 FR 59204.
---------------------------------------------------------------------------

Comments Outside the Scope of Proposal
    The agencies received several comments outside the scope of the 
proposed guidance. One commenter urged the agencies to shorten the 
length between resolution plan submissions under the Rule, from three 
to two years, and evaluate key aspects of plans annually. This 
commenter also recommended the agencies create an independent committee 
to advise the agencies on resolution planning matters as well as 
require large banking organizations to hold more capital generally. 
Another commenter argued that any LTD requirements should reflect a 
banking organization's preferred resolution strategy and not push a 
banking organization to adopt a particular strategy while another 
commenter recommended finalizing the LTD proposal as proposed. A 
commenter also encouraged the FDIC to provide banking organizations at 
least one year to comply with any final IDI Rule. Another commenter 
also recommended that the agencies promote resolvability by requiring 
large corporations to hold term deposits at the specified firms. In 
addition, another commenter suggested including in the final guidance 
expectations related to green financing. The agencies have not made any 
changes to the guidance to address these comments.

IV. Paperwork Reduction Act

    Certain provisions of the final guidance contain ``collections of 
information'' within the meaning of the Paperwork Reduction Act (PRA) 
of 1995 (44 U.S.C. 3501-3521). In accordance with the requirements of 
the PRA, the agencies may not conduct or sponsor, and the 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 have requested and OMB has assigned to the 
agencies the respective control numbers shown. The information 
collections contained in the final guidance have been submitted to OMB 
for review and approval by the FDIC under section 3507(d) of the PRA 
(44 U.S.C. 3507(d)) and section 1320.11 of OMB's implementing 
regulations (5 CFR part 1320). The Board reviewed the final guidance 
under the authority delegated to the Board by OMB and has approved 
these collections of information.
    The agencies did not receive any comments related to the PRA.
    The agencies have a continuing interest in the public's opinions of 
information collections. At any time, commenters may submit comments 
regarding the burden estimate, or any other aspect of this collection 
of information, including suggestions for reducing the burden, to the 
addresses listed in the ADDRESSES caption in the proposed guidance 
notice. All comments will become a matter of public record. Written 
comments and recommendations for these information collections also 
should be sent within 30 days of publication of this document to 
www.reginfo.gov/public/do/PRAMain. Find this particular information 
collection by selecting ``Currently under 30-day Review--Open for 
Public Comments'' or by using the search function.
    Collection title: Board: Reporting Requirements Associated with 
Regulation QQ.
    FDIC: Reporting Requirements Associated with Resolution Planning.
    OMB control number: Board 7100-0346; FDIC 3064-0210.
    Frequency: Triennial, Biennial, and on occasion.
    Respondents: Bank holding companies (including 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) with total consolidated assets of 
$250 billion or more, a bank holding companies with $100 billion or 
more in total consolidated assets with certain characteristics, and 
nonbank financial firms designated by the Financial Stability Oversight 
Council for supervision by the Board.
    Current actions: The final guidance modifies certain provisions of 
the proposed guidance. For domestic firms, the final guidance 
eliminates expectations related to separability, reducing the average 
burden hours per response by 3,000 for domestic firms using an SPOE 
strategy and 975 for domestic firms using an MPOE strategy. The final 
guidance also clarifies expectations around operational shared services 
for firms using an SPOE resolution strategy and around the IDI 
Resolution Plan/Least Cost Test for all firms. Regarding operational 
shared services, the guidance clarifies that a firm's implementation 
plan to ensure continuity of shared services should include those that 
are material to the execution of the resolution strategy, such as 
reliance on outside bankruptcy counsel and consultants. Regarding the 
FDI Act's least-cost requirement and how it relates to expectations 
around IDI resolution, the agencies provided additional detail on how 
firms can develop and support the valuation of an IDI's assets and 
liabilities in an IDI resolution. The agencies do not anticipate these 
clarifications impacting the burden estimates.
    Historically, the Board and the FDIC have split the respondents for 
purposes of PRA clearances. As such, the agencies will split the change 
in burden as well. As a result of this split and the final revisions, 
there is a proposed net increase in the overall estimated burden hours 
of 14,922 hours for the Board and 14,304 hours for the FDIC. Therefore, 
the total Board estimated burden for its entire information collection 
would be 216,129 hours and the total FDIC estimated burden would be 
210,844 hours.
    The following table presents only the change in the estimated 
burden hours, as amended by the final guidance, broken out by agency. 
The table does not include a discussion of the remaining estimated 
burden hours,

[[Page 66403]]

which remain unchanged.\58\ As shown in the table, the triennial full 
filers' resolution plan submissions would be estimated more granularly 
according to SPOE and MPOE resolution strategies.
---------------------------------------------------------------------------

    \58\ In addition to the revisions to the estimations for 
triennial full filers, the agencies have revised the estimation for 
biennial filers from 40,115 hours per response to 39,550 hours per 
response to align with burden estimation methodology with what was 
used for triennial full filers under the final guidance. 
Specifically, the agencies removed a component for a biennial 
filer's analysis of its critical operations as part of its 
submission of targeted and full resolution plans, because this 
critical operations analysis is integrated in the preparation of 
such plans.

----------------------------------------------------------------------------------------------------------------
                                                     Estimated       Estimated       Estimated       Estimated
                      FR QQ                          number of        annual       average hours   annual burden
                                                    respondents      frequency     per response        hours
----------------------------------------------------------------------------------------------------------------
                                                  Board Burdens
----------------------------------------------------------------------------------------------------------------
Current
    Triennial Full:
        Complex Foreign.........................               1               1           9,777           9,777
        Foreign and Domestic....................               7               1           4,667          32,669
                                                 ---------------------------------------------------------------
            Current Total.......................  ..............  ..............  ..............          42,446
Final
    Triennial Full:
        FBO SPOE *..............................               2               1          11,848          23,696
        FBO MPOE................................               3               1           5,939          17,817
        Domestic MPOE...........................               3               1           5,285          15,855
                                                 ---------------------------------------------------------------
            Final Total.........................  ..............  ..............  ..............          57,368
----------------------------------------------------------------------------------------------------------------
                                                  FDIC Burdens
----------------------------------------------------------------------------------------------------------------
Current
    Triennial Full:
        Complex Foreign.........................               1               1           9,777           9,777
        Foreign and Domestic....................               6               1           4,667          28,002
                                                 ---------------------------------------------------------------
            Current Total.......................  ..............  ..............  ..............          37,779
Final
    Triennial Full:
        FBO SPOE................................               2               1          11,848          23,696
        FBO MPOE................................               3               1           5,939          17,817
        Domestic MPOE...........................               2               1           5,285          10,570
                                                 ---------------------------------------------------------------
            Final Total.........................  ..............  ..............  ..............          52,083
----------------------------------------------------------------------------------------------------------------
* There are currently no domestic triennial full filers utilizing an SPOE strategy. Estimated hours per response
  for a domestic SPOE triennial full filer would be 10,535 hours.

V. Text of the Final Guidance

Guidance for Resolution Plan Submissions of Domestic Triennial Full 
Filers

I. Introduction

    Section 165(d) of the Dodd-Frank Wall Street Reform and Consumer 
Protection Act (12 U.S.C. 5365(d)) requires certain financial companies 
to report periodically to the Board of Governors of the Federal Reserve 
System (the Board) and the Federal Deposit Insurance Corporation (the 
FDIC) (together, the agencies) their plans for rapid and orderly 
resolution in the event of material financial distress or failure. On 
November 1, 2011, the agencies promulgated a joint rule implementing 
the provisions of Section 165(d).\1\ Subsequently, in November 2019, 
the agencies finalized amendments to the joint rule addressing 
amendments to the Dodd-Frank Act made by the Economic Growth, 
Regulatory Relief, and Consumer Protection Act and improving certain 
aspects of the joint rule based on the agencies' experience 
implementing the joint rule since its adoption.\2\ Financial companies 
meeting criteria set out in the Rule must file a resolution plan (Plan) 
according to the schedule specified in the Rule.
---------------------------------------------------------------------------

    \1\ Resolution Plans Required, 76 FR 67323 (Nov. 1, 2011).
    \2\ Resolution Plans Required, 84 FR 59194 (Nov. 1, 2019). The 
amendments became effective December 31, 2019. The ``Rule'' means 
the joint rule as amended in 2019. Terms not defined herein have the 
meanings set forth in the Rule.
---------------------------------------------------------------------------

    This document is intended to provide guidance to certain domestic 
financial companies required to submit Plans to assist their further 
development of a Plan for their 2025 and subsequent Plan submissions. 
Specifically, the guidance applies to any domestic covered company that 
is a triennial full filer under the Rule \3\ because it is subject to 
Category II or III standards in accordance with the Board's tailoring 
rule (specified firms or firms).\4\ The Plan for a specified firm would 
address the subsidiaries and operations that are domiciled in the 
United States as well as the foreign subsidiaries, offices, and 
operations of the covered company.
---------------------------------------------------------------------------

    \3\ See 12 CFR 243.4(b)(1) and 381.4(b)(1).
    \4\ Prudential Standards for Large Bank Holding Companies, 
Savings and Loan Holding Companies, and Foreign Banking 
Organizations, 84 FR 59032 (Nov. 1, 2019).
---------------------------------------------------------------------------

    The document does not have the force and effect of law.\5\ Rather, 
it describes the agencies' expectations and priorities regarding the 
specified firms' Plans and the agencies' general views regarding 
specific areas where additional detail should be provided and where 
certain capabilities or optionality should be

[[Page 66404]]

developed and maintained to demonstrate that each firm has considered 
fully, and is able to mitigate, obstacles to the successful 
implementation of their resolution strategy.
---------------------------------------------------------------------------

    \5\ See 12 CFR 262.7 and appendix A to 12 CFR part 262; 12 CFR 
part 302.
---------------------------------------------------------------------------

    When a domestic banking organization first becomes a specified 
firm,\6\ this document will apply to the firm's next resolution plan 
submission that is due at least 12 months after the date the firm 
becomes a specified firm. If a specified firm ceases to be subject to 
Category II or III standards, it will no longer be a specified firm, 
and this document would no longer apply to that firm.
---------------------------------------------------------------------------

    \6\ See 12 CFR 252.5(c)-(d).
---------------------------------------------------------------------------

    In general, this document is organized around a number of key 
challenges in resolution (capital; liquidity; governance mechanisms; 
operational; legal entity rationalization; and insured depository 
institution resolution (IDI), if applicable) that apply across 
resolution plans, depending on their strategy. Additional challenges or 
obstacles may arise based on a firm's particular structure, operations, 
or resolution strategy. Each firm is expected to satisfactorily address 
these vulnerabilities in its Plan. In addition, each topic of this 
guidance is separated into expectations for a specified firm that 
adopts a single point of entry (SPOE) resolution strategy for its Plan 
and expectations for a specified firm that adopts a multiple point of 
entry (MPOE) resolution strategy for its Plan.
    Under the Rule, the agencies will review a Plan to determine if it 
satisfactorily addresses key potential challenges, including those 
specified below. If the agencies jointly decide that an aspect of a 
Plan presents a weakness that individually or in conjunction with other 
aspects could undermine the feasibility of the Plan, the agencies may 
determine jointly that the Plan is not credible or would not facilitate 
an orderly resolution under the U.S. Bankruptcy Code. The agencies may 
not take enforcement actions or issue findings based on this guidance.

II. Capital

SPOE
    The firm should have the capital capabilities necessary to execute 
its resolution strategy, including the modeling and estimation process 
described below.
    Resolution Capital Adequacy and Positioning (RCAP). In order to 
help ensure that a firm's material entities \7\ could operate while the 
parent company is in bankruptcy, the firm should have an adequate 
amount of loss-absorbing capacity to recapitalize those material 
entities. Thus, a firm should have outstanding a minimum amount of 
loss-absorbing capacity, including long-term debt, to help ensure that 
the firm has adequate capacity to meet that need at a consolidated 
level (external LAC). \8\
---------------------------------------------------------------------------

    \7\ The terms ``material entities,'' ``identified critical 
operations,'' and ``core business lines'' have the same meaning as 
in the Rule.
    \8\ Total Loss-Absorbing Capacity, Long-Term Debt, and Clean 
Holding Company Requirements for Systemically Important U.S. Bank 
Holding Companies and Intermediate Holding Companies of Systemically 
Important Foreign Banking Organizations, 82 FR 8266 (Jan. 24, 2017); 
Long-Term Debt Requirements for Large Bank Holding Companies, 
Certain Intermediate Holding Companies of Foreign Banking 
Organizations, and Large Insured Depository Institutions, 88 FR 
64524 (Sept. 19, 2023).
---------------------------------------------------------------------------

    A firm's external LAC should be complemented by appropriate 
positioning of loss-absorbing capacity within the firm (i.e., internal 
LAC), consistent with any applicable rules requiring prepositioned 
resources at IDIs in the form of long-term debt. After adhering to any 
requirements related to prepositioning long-term debt at IDIs, the 
positioning of a firm's remaining resources should balance the 
certainty associated with pre-positioning resources directly at 
material entities with the flexibility provided by holding 
recapitalization resources at the parent (contributable resources) to 
meet unanticipated losses at material entities. That balance should 
take account of both pre-positioning at material entities and holding 
resources at the parent, and the obstacles associated with each. With 
respect to material entities that are not U.S. IDIs subject to pre-
positioned long-term debt requirements, the firm should not rely 
exclusively on either full pre-positioning or parent contributable 
resources to recapitalize such entities. The Plan should describe the 
positioning of resources within the firm, along with analysis 
supporting such positioning.
    Finally, to the extent that pre-positioned resources at a material 
entity are in the form of intercompany debt and there are one or more 
entities between that material entity and the parent, the firm should 
structure the instruments so as to ensure that the material entity can 
be recapitalized.
    Resolution Capital Execution Need (RCEN). To the extent 
necessitated by the firm's resolution strategy, material entities need 
to be recapitalized to a level that allows them to operate or be wound 
down in an orderly manner following the parent company's bankruptcy 
filing. The firm should have a methodology for periodically estimating 
the amount of capital that may be needed to support each material 
entity after the bankruptcy filing (RCEN). The firm's positioning of 
resources should be able to support the RCEN estimates. In addition, 
the RCEN estimates should be incorporated into the firm's governance 
framework to ensure that the parent company files for bankruptcy at a 
time that enables execution of the preferred strategy.
    The firm's RCEN methodology should use conservative forecasts for 
losses and risk-weighted assets and incorporate estimates of potential 
additional capital needs through the resolution period,\9\ consistent 
with the firm's resolution strategy. The RCEN methodology should be 
calibrated such that recapitalized material entities will have 
sufficient capital to maintain market confidence as required under the 
preferred resolution strategy. Capital levels should meet or exceed all 
applicable regulatory capital requirements for ``well-capitalized'' 
status and meet estimated additional capital needs throughout 
resolution. Material entities that are not subject to capital 
requirements may be considered sufficiently recapitalized when they 
have achieved capital levels typically required to obtain an 
investment-grade credit rating or, if the entity is not rated, an 
equivalent level of financial soundness. Finally, the methodology 
should be independently reviewed, consistent with the firm's corporate 
governance processes and controls for the use of models and 
methodologies.
---------------------------------------------------------------------------

    \9\ The resolution period begins immediately after the parent 
company bankruptcy filing and extends through the completion of the 
preferred resolution strategy.
---------------------------------------------------------------------------

MPOE
    N/A.

III. Liquidity

SPOE
    The firm should have the liquidity capabilities necessary to 
execute its preferred resolution strategy. For resolution purposes, 
these capabilities should include having an appropriate model and 
process for estimating and maintaining sufficient liquidity at or 
readily available to material entities and a methodology for estimating 
the liquidity needed to successfully execute the resolution strategy, 
as described below.
    Resolution Liquidity Adequacy and Positioning (RLAP). With respect 
to RLAP, the firm should be able to measure the stand-alone liquidity 
position of each material entity (including material entities that are 
non-U.S. branches)--i.e., the high-quality liquid assets (HQLA) at the 
material

[[Page 66405]]

entity less net outflows to third parties and affiliates--and ensure 
that liquidity is readily available to meet any deficits. The RLAP 
model should cover a period of at least 30 days and reflect the 
idiosyncratic liquidity profile and risk of the firm. The model should 
balance the reduction in frictions associated with holding liquidity 
directly at material entities with the flexibility provided by holding 
HQLA at the parent available to meet unanticipated outflows at material 
entities. Thus, the firm should not rely exclusively on either full 
pre-positioning or an expected contribution of liquid resources from 
the parent. The model \10\ should ensure that the parent holding 
company holds sufficient HQLA (inclusive of its deposits at the U.S. 
branch of the lead bank subsidiary) to cover the sum of all stand-alone 
material entity net liquidity deficits. The stand-alone net liquidity 
position of each material entity (HQLA less net outflows) should be 
measured using the firm's internal liquidity stress test assumptions 
and should treat inter-affiliate exposures in the same manner as third-
party exposures. For example, an overnight unsecured exposure to an 
affiliate should be assumed to mature. Finally, the firm should not 
assume that a net liquidity surplus at one material entity could be 
moved to meet net liquidity deficits at other material entities or to 
augment parent resources.
---------------------------------------------------------------------------

    \10\ ``Model'' refers to the set of calculations estimating the 
net liquidity surplus/deficit at each legal entity and for the firm 
in aggregate based on assumptions regarding available liquidity, 
e.g., HQLA and third-party and interaffiliate net outflows.
---------------------------------------------------------------------------

    Additionally, the RLAP methodology should take into account: (A) 
the daily contractual mismatches between inflows and outflows; (B) the 
daily flows from movement of cash and collateral for all inter-
affiliate transactions; and (C) the daily stressed liquidity flows and 
trapped liquidity as a result of actions taken by clients, 
counterparties, key financial market utilities (FMUs), and foreign 
supervisors, among others.
    Resolution Liquidity Execution Need (RLEN). The firm should have a 
methodology for estimating the liquidity needed after the parent's 
bankruptcy filing to stabilize the surviving material entities and to 
allow those entities to operate post-filing. The RLEN estimate should 
be incorporated into the firm's governance framework to ensure that the 
firm files for bankruptcy in a timely way, i.e., prior to the firm's 
HQLA falling below the RLEN estimate.
    The firm's RLEN methodology should:
    (A) Estimate the minimum operating liquidity (MOL) needed at each 
material entity to ensure those entities could continue to operate 
post-parent's bankruptcy filing and/or to support a wind-down strategy;
    (B) Provide daily cash flow forecasts by material entity to support 
estimation of peak funding needs to stabilize each entity under 
resolution;
    (C) Provide a comprehensive breakout of all inter-affiliate 
transactions and arrangements that could impact the MOL or peak funding 
needs estimates; and
    (D) Estimate the minimum amount of liquidity required at each 
material entity to meet the MOL and peak needs noted above, which would 
inform the firm's board(s) of directors of when they need to take 
resolution-related actions.
    The MOL estimates should capture material entities' intraday 
liquidity requirements, operating expenses, working capital needs, and 
inter-affiliate funding frictions to ensure that material entities 
could operate without disruption during the resolution. The peak 
funding needs estimates should be projected for each material entity 
and cover the length of time the firm expects it would take to 
stabilize that material entity. Inter-affiliate funding frictions 
should be taken into account in the estimation process.
    The firm's forecasts of MOL and peak funding needs should ensure 
that material entities could operate through resolution consistent with 
regulatory requirements, market expectations, and the firm's post-
failure strategy. These forecasts should inform the RLEN estimate, 
i.e., the minimum amount of HQLA required to facilitate the execution 
of the firm's strategy. The RLEN estimate should be tied to the firm's 
governance mechanisms and be incorporated into the playbooks as 
discussed below to assist the board of directors in taking timely 
resolution-related actions.
MPOE
    The firm should have the liquidity capabilities necessary to 
execute its preferred resolution strategy. A Plan with an MPOE 
resolution strategy should include analysis and projections of a range 
of liquidity needs during resolution, including intraday; reflect 
likely failure and resolution scenarios; and consider the guidance on 
assumptions provided in Section VIII, Format and Structure of Plans; 
Assumptions.

IV. Governance Mechanisms

SPOE
    Playbooks and Triggers. A firm should identify the governance 
mechanisms that would ensure execution of required board actions at the 
appropriate time (as anticipated under the firm's preferred strategy) 
and include pre-action triggers and existing agreements for such 
actions. Governance playbooks should detail the board and senior 
management actions necessary to facilitate the firm's preferred 
strategy and to mitigate vulnerabilities, and should incorporate the 
triggers identified below. The governance playbooks should also include 
a discussion of:
    (A) The firm's proposed communications strategy, both internal and 
external; \11\
---------------------------------------------------------------------------

    \11\ External communications include those with U.S. and foreign 
authorities and other external stakeholders, such as large 
depositors and shareholders.
---------------------------------------------------------------------------

    (B) The boards of directors' fiduciary responsibilities and how 
planned actions would be consistent with such responsibilities 
applicable at the time actions are expected to be taken;
    (C) Potential conflicts of interest, including interlocking boards 
of directors; and
    (D) Any employee retention policy. All responsible parties and 
timeframes for action should be identified. Governance playbooks should 
be updated periodically for all entities whose boards of directors 
would need to act in advance of the commencement of resolution 
proceedings under the firm's preferred strategy.
    The firm should demonstrate that key actions will be taken at the 
appropriate time in order to mitigate financial, operational, legal, 
and regulatory vulnerabilities. To ensure that these actions will 
occur, the firm should establish clearly identified triggers linked to 
specific actions for:
    (A) The escalation of information to senior management and the 
board(s) to potentially take the corresponding actions at each stage of 
distress leading eventually to the decision to file for bankruptcy;
    (B) Successful recapitalization of subsidiaries prior to the 
parent's filing for bankruptcy and funding of such entities during the 
parent company's bankruptcy to the extent the preferred strategy relies 
on such actions or support; and

[[Page 66406]]

    (C) The timely execution of a bankruptcy filing and related pre-
filing actions.\12\
---------------------------------------------------------------------------

    \12\ Key pre-filing actions include the preparation of any 
emergency motion required to be decided on the first day of the 
firm's bankruptcy.
---------------------------------------------------------------------------

    These triggers should be based, at a minimum, on capital, 
liquidity, and market metrics, and should incorporate the firm's 
methodologies for forecasting the liquidity and capital needed to 
operate as required by the preferred strategy following a parent 
company's bankruptcy filing. Additionally, the triggers and related 
actions should be specific.
    Triggers linked to firm actions as contemplated by the firm's 
preferred strategy should identify when and under what conditions the 
firm, including the parent company and its material entities, would 
transition from business-as-usual (BAU) conditions to a stress period 
and from a stress period to the recapitalization/resolution periods. 
Corresponding escalation procedures, actions, and timeframes should be 
constructed so that breach of the triggers will allow prerequisite 
actions to be completed. For example, breach of the triggers needs to 
occur early enough to ensure that resources are available and can be 
downstreamed, if anticipated by the firm's strategy, and with adequate 
time for the preparation of the bankruptcy petition and first-day 
motions, necessary stakeholder communications, and requisite board 
actions. Triggers identifying the onset of stress and recapitalization/
resolution periods, and the associated escalation procedures and 
actions, should be discussed directly in the governance playbooks.
    Pre-Bankruptcy Parent Support. The Plan should include a detailed 
legal analysis of the potential state law and bankruptcy law challenges 
and mitigants to planned provision of capital and liquidity to the 
subsidiaries prior to the parent's bankruptcy filing (Support). 
Specifically, the analysis should identify potential legal obstacles 
and explain how the firm would seek to ensure that Support would be 
provided as planned. Legal obstacles include claims of fraudulent 
transfer, preference, breach of fiduciary duty, and any other 
applicable legal theory identified by the firm. The analysis also 
should include related claims that may prevent or delay an effective 
recapitalization, such as equitable claims to enjoin the transfer 
(e.g., imposition of a constructive trust by the court). The analysis 
should apply the actions contemplated in the Plan regarding each 
element of the claim, the anticipated timing for commencement and 
resolution of the claims, and the extent to which adjudication of such 
claim could affect execution of the firm's preferred resolution 
strategy.
    The analysis should include mitigants to the potential challenges 
to the planned Support. The Plan should identify the mitigant(s) to 
such challenges that the firm considers most effective. In identifying 
appropriate mitigants, the firm should consider the effectiveness of a 
contractually binding mechanism (CBM), pre-positioning of financial 
resources in material entities, and the creation of an intermediate 
holding company. Moreover, if the Plan includes a CBM, the firm should 
consider whether it is appropriate that the CBM should have the 
following:
    (A) Clearly defined triggers;
    (B) Triggers that are synchronized to the firm's liquidity and 
capital methodologies;
    (C) Perfected security interests in specified collateral sufficient 
to fully secure all Support obligations on a continuous basis 
(including mechanisms for adjusting the amount of collateral as the 
value of obligations under the agreement or collateral assets 
fluctuates); and
    (D) Liquidated damages provisions or other features designed to 
make the CBM more enforceable.
    The firm also should consider related actions or agreements that 
may enhance the effectiveness of a CBM. A copy of any agreement and 
documents referenced therein (e.g., evidence of security interest 
perfection) should be included in the Plan.
    The governance playbooks included in the Plan should incorporate 
any developments from the firm's analysis of potential legal challenges 
regarding the Support, including any Support approach(es) the firm has 
implemented. If the firm analyzed and addressed an issue noted in this 
section in a prior plan submission, the Plan may reproduce that 
analysis and arguments and should build upon it to at least the extent 
described above, including ensuring that, as with all other aspects of 
the Plan, it remains accurate and up to date. In preparing the analysis 
of these issues, firms may consult with law firms and other experts on 
these matters. The agencies do not object to appropriate collaboration 
between firms, including through trade organizations and with the 
academic community, to develop analysis of common legal challenges and 
available mitigants.
MPOE
    N/A.

V. Operational

SPOE
    Payment, Clearing, and Settlement Activities Framework. Maintaining 
continuity of payment, clearing, and settlement (PCS) services is 
critical for the orderly resolution of firms that are either users or 
providers,\13\ or both, of PCS services. A firm should demonstrate 
capabilities for continued access to PCS services essential to an 
orderly resolution through a framework to support such access by:
---------------------------------------------------------------------------

    \13\ A firm is a user of PCS services if it accesses PCS 
services through an agent bank or it uses the services of a 
financial market utility (FMU) through its membership in that FMU or 
through an agent bank. A firm is a provider of PCS services if it 
provides PCS services to clients as an agent bank or it provides 
clients with access to an FMU or agent bank through the firm's 
membership in or relationship with that service provider. A firm is 
also a provider if it provides clients with PCS services through the 
firm's own operations (e.g., payment services or custody services).
---------------------------------------------------------------------------

     Identifying clients,\14\ FMUs, and agent banks as key from 
the firm's perspective for the firm's material entities, identified 
critical operations, and core business lines, using both quantitative 
(volume and value) \15\ and qualitative criteria;
---------------------------------------------------------------------------

    \14\ For purposes of this section, a client is an individual or 
entity, including affiliates of the firm, to whom the firm provides 
PCS services and any related credit or liquidity offered in 
connection with those services.
    \15\ In identifying entities as key, examples of quantitative 
criteria may include: for a client, transaction volume/value, market 
value of exposures, assets under custody, usage of PCS services, and 
any extension of related intraday credit or liquidity; for an FMU, 
the aggregate volumes and values of all transactions processed 
through such FMU; and for an agent bank, assets under custody, the 
value of cash and securities settled, and extensions of intraday 
credit.
---------------------------------------------------------------------------

     Mapping material entities, identified critical operations, 
core business lines, and key clients to both key FMUs and key agent 
banks; and
     Developing a playbook for each key FMU and key agent bank 
essential to an orderly resolution under its preferred resolution 
strategy that reflects the firm's role(s) as a user and/or provider of 
PCS services.
    The framework should address direct relationships (e.g., a firm's 
direct membership in an FMU, a firm's provision of clients with PCS 
services through its own operations, or a firm's contractual 
relationship with an agent bank) and indirect relationships (e.g., a 
firm's provision of clients with access to the relevant FMU or agent 
bank through the firm's membership in or relationship with that FMU or 
agent bank).
    Playbooks for Continued Access to PCS Services. The firm is 
expected to provide a playbook for each key FMU and key agent bank that 
addresses

[[Page 66407]]

considerations that would assist the firm and its key clients in 
maintaining continued access to PCS services in the period leading up 
to and including the firm's resolution. Each playbook should provide 
analysis of the financial and operational impact to the firm's material 
entities and key clients due to adverse actions that may be taken by a 
key FMU or a key agent bank and contingency actions that may be taken 
by the firm. Each playbook also should discuss any possible alternative 
arrangements that would allow continued access to PCS services for the 
firm's material entities, identified critical operations and core 
business lines, and key clients, while the firm is in resolution. The 
firm is not expected to incorporate a scenario in which it loses key 
FMU or key agent bank access into its preferred resolution strategy or 
its RLEN and RCEN estimates. The firm should continue to engage with 
key FMUs, key agent banks, and key clients, and playbooks should 
reflect any feedback received during such ongoing outreach.
    Content Related to Users of PCS Services. Individual key FMU and 
key agent bank playbooks should include:
     Description of the firm's relationship as a user with the 
key FMU or key agent bank and the identification and mapping of PCS 
services to material entities, identified critical operations, and core 
business lines that use those PCS services;
     Discussion of the potential range of adverse actions that 
may be taken by that key FMU or key agent bank when the firm is in 
resolution,\16\ the operational and financial impact of such actions on 
each material entity, and contingency arrangements that may be 
initiated by the firm in response to potential adverse actions by the 
key FMU or key agent bank; and
---------------------------------------------------------------------------

    \16\ Examples of potential adverse actions may include increased 
collateral and margin requirements and enhanced reporting and 
monitoring.
---------------------------------------------------------------------------

     Discussion of PCS-related liquidity sources and uses in 
BAU, in stress, and in the resolution period, presented by currency 
type (with U.S. dollar equivalent) and by material entity.
    [cir] PCS Liquidity Sources: These may include the amounts of 
intraday extensions of credit, liquidity buffer, inflows from FMU 
participants, and key client prefunded amounts in BAU, in stress, and 
in the resolution period. The playbook also should describe intraday 
credit arrangements (e.g., facilities of the key FMU, key agent bank, 
or a central bank) and any similar custodial arrangements that allow 
ready access to a firm's funds for PCS-related key FMU and key agent 
bank obligations (including margin requirements) in all currencies 
relevant to the firm's participation, including placements of firm 
liquidity at central banks, key FMUs, and key agent banks.
    [cir] PCS Liquidity Uses: These may include firm and key client 
margin and prefunding and intraday extensions of credit, including 
incremental amounts required during resolution.
    [cir] Intraday Liquidity Inflows and Outflows: The playbook should 
describe the firm's ability to control intraday liquidity inflows and 
outflows and to identify and prioritize time-specific payments. The 
playbook also should describe any account features that might restrict 
the firm's ready access to its liquidity sources.
    Content Related to Providers of PCS Services.\17\ Individual key 
FMU and key agent bank playbooks should include:
---------------------------------------------------------------------------

    \17\ Where a firm is a provider of PCS services through the 
firm's own operations, the firm is expected to produce a playbook 
for the material entities that provide those services, addressing 
each of the items described under ``Content Related to Providers of 
PCS Services,'' which include contingency arrangements to permit the 
firm's key clients to maintain continued access to PCS services.
---------------------------------------------------------------------------

     Identification and mapping of PCS services to the material 
entities, identified critical operations, and core business lines that 
provide those PCS services, and a description of the scale and the way 
in which each provides PCS services;
     Identification and mapping of PCS services to key clients 
to whom the firm provides such PCS services and any related credit or 
liquidity offered in connection with such services;
     Discussion of the potential range of firm contingency 
arrangements available to minimize disruption to the provision of PCS 
services to its key clients, including the viability of transferring 
key client activity and any related assets, as well as any alternative 
arrangements that would allow the firm's key clients continued access 
to PCS services if the firm could no longer provide such access (e.g., 
due to the firm's loss of key FMU or key agent bank access), and the 
financial and operational impacts of such arrangements from the firm's 
perspective;
     Descriptions of the range of contingency actions that the 
firm may take concerning its provision of intraday credit to key 
clients, including analysis quantifying the potential liquidity the 
firm could generate by taking such actions in stress and in the 
resolution period, such as: (i) requiring key clients to designate or 
appropriately pre-position liquidity, including through prefunding of 
settlement activity, for PCS-related key FMU and key agent bank 
obligations at specific material entities of the firm (e.g., direct 
members of key FMUs) or any similar custodial arrangements that allow 
ready access to key clients' funds for such obligations in all relevant 
currencies of key clients of the firm's operations; (ii) delaying or 
restricting key client PCS activity; and (iii) restricting, imposing 
conditions upon (e.g., requiring collateral), or eliminating the 
provision of intraday credit or liquidity to key clients; and
     Descriptions of how the firm will communicate to its key 
clients the potential impacts of implementation of any identified 
contingency arrangements or alternatives, including a description of 
the firm's methodology for determining whether any additional 
communication should be provided to some or all key clients (e.g., due 
to the key client's BAU usage of that access and/or related intraday 
credit or liquidity), and the expected timing and form of such 
communication.
    Capabilities. The firm is expected to have and describe 
capabilities to understand, for each material entity, the obligations 
and exposures associated with PCS activities, including contractual 
obligations and commitments. The firm should be able to:
     Track the following items by: (i) material entity; and 
(ii) with respect to customers, counterparties, and agents and service 
providers, location and jurisdiction:
    [cir] PCS activities, with each activity mapped to the relevant 
material entities, identified critical operations, and core business 
lines; \18\
---------------------------------------------------------------------------

    \18\ 12 CFR 243.5(e)(12) and 381.5(e)(12).
---------------------------------------------------------------------------

    [cir] Customers and counterparties for PCS activities, including 
values and volumes of various transaction types, as well as used and 
unused capacity for all lines of credit; \19\
---------------------------------------------------------------------------

    \19\ Id.
---------------------------------------------------------------------------

    [cir] Exposures to and volumes transacted with FMUs, nostro agents, 
and custodians; and \20\
---------------------------------------------------------------------------

    \20\ 12 CFR 252.34(h).
---------------------------------------------------------------------------

    [cir] Services provided and service level agreements, as 
applicable, for other current agents and service providers (internal 
and external).\21\
---------------------------------------------------------------------------

    \21\ 12 CFR 243.5(f)(l)(i) and 381.5(f)(1)(i).
---------------------------------------------------------------------------

     Assess the potential effects of adverse actions by FMUs, 
nostro agents, custodians, and other agents and service providers, 
including suspension or termination of membership or services, on the 
firm's operations and customers

[[Page 66408]]

and counterparties of those operations; \22\
---------------------------------------------------------------------------

    \22\ 12 CFR 252.34(f).
---------------------------------------------------------------------------

     Develop contingency arrangements in the event of such 
adverse actions; \23\ and
---------------------------------------------------------------------------

    \23\ Id.
---------------------------------------------------------------------------

     Quantify the liquidity needs and operational capacity 
required to meet all PCS obligations, including any change in demand 
for and sources of liquidity needed to meet such obligations.
    Managing, Identifying, and Valuing Collateral. The firm is expected 
to have and describe its capabilities to manage, identify, and value 
the collateral that it receives from and posts to external parties and 
affiliates. Specifically, the firm should:
     Be able to query and provide aggregate statistics for all 
qualified financial contracts concerning cross-default clauses, 
downgrade triggers, and other key collateral-related contract terms--
not just those terms that may be impacted in an adverse economic 
environment--across contract types, business lines, legal entities, and 
jurisdictions;
     Be able to track both collateral sources (i.e., 
counterparties that have pledged collateral) and uses (i.e., 
counterparties to whom collateral has been pledged) at the CUSIP level 
on at least a t+1 basis;
     Have robust risk measurements for cross-entity and cross-
contract netting, including consideration of where collateral is held 
and pledged;
     Be able to identify CUSIP and asset class level 
information on collateral pledged to specific central counterparties by 
legal entity on at least a t+1 basis;
     Be able to track and report on inter-branch collateral 
pledged and received on at least a t+1 basis and have clear policies 
explaining the rationale for such inter-branch pledges, including any 
regulatory considerations; and
     Have a comprehensive collateral management policy that 
outlines how the firm as a whole approaches collateral and serves as a 
single source for governance.\24\
---------------------------------------------------------------------------

    \24\ The policy may reference subsidiary or related policies 
already in place, as implementation may differ based on business 
line or other factors.
---------------------------------------------------------------------------

    Management Information Systems. The firm should have the management 
information systems (MIS) capabilities to readily produce data on a 
legal entity basis and have controls to ensure data integrity and 
reliability. The firm also should perform a detailed analysis of the 
specific types of financial and risk data that would be required to 
execute the preferred resolution strategy and how frequently the firm 
would need to produce the information, with the appropriate level of 
granularity. The firm should have the capabilities to produce the 
following types of information, as applicable, in a timely manner and 
describe these capabilities in the Plan:
     Financial statements for each material entity (at least 
monthly);
     External and inter-affiliate credit exposures, both on- 
and off-balance sheet, by type of exposure, counterparty, maturity, and 
gross payable and receivable;
     Gross and net risk positions with internal and external 
counterparties;
     Guarantees, cross holdings, financial commitments and 
other transactions between material entities;
     Data to facilitate third-party valuation of assets and 
businesses, including risk metrics;
     Key third-party contracts, including the provider, 
provider's location, service(s) provided, legal entities that are a 
party to or a beneficiary of the contract, and key contractual rights 
(for example, termination and change in control clauses);
     Legal agreement information, including parties to the 
agreement and key terms and interdependencies (for example, change in 
control, collateralization, governing law, termination events, 
guarantees, and cross-default provisions);
     Service level agreements between affiliates, including the 
service(s) provided, the legal entity providing the service, legal 
entities receiving the service, and any termination/transferability 
provisions;
     Licenses and memberships to all exchanges and value 
transfer networks, including FMUs;
     Key management and support personnel, including dual-
hatted employees, and any associated retention agreements;
     Agreements and other legal documents related to property, 
including facilities, technology systems, software, and intellectual 
property rights. The information should include ownership, physical 
location, where the property is managed and names of legal entities and 
lines of business that the property supports; and
     Updated legal records for domestic and foreign entities, 
including entity type and purpose (for example, holding company, bank, 
broker dealer, and service entity), jurisdiction(s), ownership, and 
regulator(s).
    Shared and Outsourced Services. The firm should maintain a fully 
actionable implementation plan to ensure the continuity of shared 
services that support identified critical operations or core business 
lines, or are material to the execution of the resolution strategy, and 
robust arrangements to support the continuity of shared and outsourced 
services, including, without limitation, appropriate plans to retain 
key personnel relevant to the execution of the firm's strategy. For 
example, specified firms should evaluate internal and external 
dependencies and develop documented strategies and contingency 
arrangements for the continuity or replacement of the shared and 
outsourced services that are necessary to maintain identified critical 
operations or core business lines, or are material to the execution of 
the resolution strategy. Examples may include personnel, facilities, 
systems, data warehouses, intellectual property, and counsel and 
consultants involved in the preparation for and filing of bankruptcy. 
Specified firms also should maintain current cost estimates for 
implementing such strategies and contingency arrangements.
    The firm should (A) maintain an identification of all shared 
services that support identified critical operations or core business 
lines, or are material to the execution of the resolution strategy; 
\25\ (B) maintain a mapping of how/where these services support its 
core business lines and identified critical operations; (C) incorporate 
such mapping into legal entity rationalization criteria and 
implementation efforts; and (D) mitigate identified continuity risks 
through establishment of service-level agreements (SLAs) for all shared 
services that support identified critical operations or core business 
lines, or are material to the execution of the resolution strategy.
---------------------------------------------------------------------------

    \25\ This should be interpreted to include data access and 
intellectual property rights.
---------------------------------------------------------------------------

    SLAs should fully describe the services provided, reflect pricing 
considerations on an arm's-length basis where appropriate, and 
incorporate appropriate terms and conditions to (A) prevent automatic 
termination upon certain resolution-related events and (B) achieve 
continued provision of such services during resolution. The firm should 
also store SLAs in a central repository or repositories in a searchable 
format, develop and document contingency strategies and arrangements 
for replacement of critical shared services, and complete re-alignment 
or restructuring of activities within its corporate structure. In 
addition, the firm should ensure the financial resilience of internal 
shared service providers by maintaining working capital for six months 
(or through the period of

[[Page 66409]]

stabilization as required in the firm's preferred strategy) in such 
entities sufficient to cover contract costs, consistent with the 
preferred resolution strategy.
    The firm should identify all critical service providers and 
outsourced services that support identified critical operations or core 
business lines, or are material to the execution of the resolution 
strategy, and identify any that could not be promptly substituted. The 
firm should (A) evaluate the agreements governing these services to 
determine whether there are any that could be terminated upon 
commencement of any resolution despite continued performance, and (B) 
update contracts to incorporate appropriate terms and conditions to 
prevent automatic termination upon commencement of any resolution 
proceeding and facilitate continued provision of such services. Relying 
on entities projected to survive during resolution to avoid contract 
termination is insufficient to ensure continuity. In the Plan, the firm 
should document the amendment of any such agreements governing these 
services.
    Qualified Financial Contracts. The Plan should reflect how the 
early termination of qualified financial contracts triggered by the 
parent company's bankruptcy filing could impact the resolution of the 
firm's operations, including potential termination of any contracts 
that are not subject to statutory, contractual or regulatory stays of 
direct default or cross-default rights. A Plan should explain and 
support the firm's strategy for addressing the potential disruptive 
effects in resolution of early termination provisions and cross-default 
rights in existing qualified financial contracts at both the parent 
company and material entity subsidiaries. This discussion should 
address, to the extent relevant for the firm, qualified financial 
contracts that include limitations of standard contractual direct 
default and cross default rights by agreement of the parties.
MPOE
    Payment, Clearing, and Settlement Activities Capabilities. The firm 
is expected to have and describe capabilities to understand, for each 
material entity, the obligations and exposures associated with PCS 
activities, including contractual obligations and commitments. For 
example, firms should be able to:
     As users of PCS services:
    [cir] Track the following items by: (i) material entity; and (ii) 
with respect to customers, counterparties, and agents and service 
providers, location and jurisdiction:
    [ssquf] PCS activities, with each activity mapped to the relevant 
material entities, identified critical operations, and core business 
lines;
    [ssquf] Customers and counterparties for PCS activities, including 
values and volumes of various transaction types, as well as used and 
unused capacity for all lines of credit;
    [ssquf] Exposures to and volumes transacted with FMUs, nostro 
agents, and custodians; and
    [ssquf] Services provided and service level agreements, as 
applicable, for other current agents and service providers (internal 
and external).
    [cir] Assess the potential effects of adverse actions by FMUs, 
nostro agents, custodians, and other agents and service providers, 
including suspension or termination of membership or services, on the 
firm's operations and customers and counterparties of those operations;
    [cir] Develop contingency arrangements in the event of such adverse 
actions; and
    [cir] Quantify the liquidity needs and operational capacity 
required to meet all PCS obligations, including intraday requirements.
     As providers of PCS services:
    [cir] Identify their PCS clients and the services they provide to 
these clients, including volumes and values of transactions;
    [cir] Quantify and explain time-sensitive payments; and
    [cir] Quantify and explain intraday credit provided.
    Managing, Identifying and Valuing Collateral. The firm is expected 
to have and describe its capabilities to manage, identify and value the 
collateral that it receives from and posts to external parties and 
affiliates, including tracking collateral received, pledged, and 
available at the CUSIP level and measuring exposures.
    Management Information Systems. The firm should have the management 
information systems (MIS) capabilities to readily produce data on a 
legal entity basis and have controls to ensure data integrity and 
reliability. The firm also should perform a detailed analysis of the 
specific types of financial and risk data that would be required to 
execute the preferred resolution strategy. The firm should have the 
capabilities to produce the following types of information, as 
applicable, in a timely manner and describe these capabilities in the 
Plan:
     Financial statements for each material entity (at least 
monthly);
     External and inter-affiliate credit exposures, both on- 
and off-balance sheet, by type of exposure, counterparty, maturity, and 
gross payable and receivable;
     Gross and net risk positions with internal and external 
counterparties;
     Guarantees, cross holdings, financial commitments and 
other transactions between material entities;
     Data to facilitate third-party valuation of assets and 
businesses, including risk metrics;
     Key third-party contracts, including the provider, 
provider's location, service(s) provided, legal entities that are a 
party to or a beneficiary of the contract, and key contractual rights 
(for example, termination and change in control clauses);
     Legal agreement information, including parties to the 
agreement and key terms and interdependencies (for example, change in 
control, collateralization, governing law, termination events, 
guarantees, and cross-default provisions);
     Service level agreements between affiliates, including the 
service(s) provided, the legal entity providing the service, legal 
entities receiving the service, and any termination/transferability 
provisions;
     Licenses and memberships to all exchanges and value 
transfer networks, including FMUs;
     Key management and support personnel, including dual-
hatted employees, and any associated retention agreements;
     Agreements and other legal documents related to property, 
including facilities, technology systems, software, and intellectual 
property rights. The information should include ownership, physical 
location, where the property is managed and names of legal entities and 
lines of business that the property supports; and
     Updated legal records for domestic and foreign entities, 
including entity type and purpose (for example, holding company, bank, 
broker dealer, and service entity), jurisdiction(s), ownership, and 
regulator(s).
    Shared and Outsourced Services. The firm should maintain robust 
arrangements to support the continuity of shared and outsourced 
services that support any identified critical operations or are 
material to the execution of the resolution strategy, including 
appropriate plans to retain key personnel relevant to the execution of 
the firm's strategy. For example, specified firms should evaluate 
internal and external dependencies and develop documented strategies 
and contingency arrangements for the continuity or replacement of the 
shared and outsourced services that are necessary to maintain 
identified critical operations

[[Page 66410]]

or are material to the execution of the resolution strategy. Examples 
may include personnel, facilities, systems, data warehouses, 
intellectual property, and counsel and consultants involved in the 
preparation for and filing of bankruptcy. Specified firms also should 
maintain current cost estimates for implementing such strategies and 
contingency arrangements.
    The firm should: (A) maintain an identification of all shared 
services that support identified critical operations or are material to 
the execution of the resolution strategy; and (B) mitigate identified 
continuity risks through establishment of SLAs for all shared services 
supporting identified critical operations or are material to the 
execution of the resolution strategy. SLAs should fully describe the 
services provided and incorporate appropriate terms and conditions to: 
(A) prevent automatic termination upon certain resolution-related 
events; and (B) achieve continued provision of such services during 
resolution.
    The firm should identify all critical service providers and 
outsourced services that support identified critical operations or are 
material to the execution of the resolution strategy. Any of these 
services that cannot be promptly substituted should be identified in a 
firm's Plan. The firm should: (A) evaluate the agreements governing 
these services to determine whether there are any that could be 
terminated upon commencement of any resolution despite continued 
performance; and (B) update contracts to incorporate appropriate terms 
and conditions to prevent automatic termination upon commencement of 
any resolution proceeding and facilitate continued provision of such 
services. Relying on entities projected to survive during resolution to 
avoid contract termination is insufficient to ensure continuity. In the 
Plan, the firm should document the amendment of any such agreements 
governing these services.

VI. Legal Entity Rationalization

SPOE
    Legal Entity Rationalization Criteria (LER Criteria). A firm should 
develop and implement legal entity rationalization criteria that 
support the firm's preferred resolution strategy and minimize risk to 
U.S. financial stability in the event of the firm's resolution. LER 
Criteria should consider the best alignment of legal entities and 
business lines to improve the firm's resolvability under different 
market conditions. LER Criteria should govern the firm's corporate 
structure and arrangements between legal entities in a way that 
facilitates the firm's resolvability as its activities, technology, 
business models, or geographic footprint change over time. 
Specifically, application of the criteria should:
    (A) Facilitate the recapitalization and liquidity support of 
material entities, as required by the firm's resolution strategy. Such 
criteria should include clean lines of ownership, minimal use of 
multiple intermediate holding companies, and clean funding pathways 
between the parent and material operating entities;
    (B) Facilitate the sale, transfer, or wind-down of certain discrete 
operations within a timeframe that would meaningfully increase the 
likelihood of an orderly resolution of the firm, including provisions 
for the continuity of associated services and mitigation of financial, 
operational, and legal challenges to separation and disposition;
    (C) Adequately protect the subsidiary IDIs from risks arising from 
the activities of any nonbank subsidiaries of the firm (other than 
those that are subsidiaries of an IDI); and
    (D) Minimize complexity that could impede an orderly resolution and 
minimize redundant and dormant entities.
    These criteria should be built into the firm's ongoing process for 
creating, maintaining, and optimizing its structure and operations on a 
continuous basis.
    Finally, the Plan should include a description of the firm's legal 
entity rationalization governance process.
MPOE
    Legal Entity Structure. A firm should maintain a legal entity 
structure that supports the firm's preferred resolution strategy and 
minimizes risk to U.S. financial stability in the event of the firm's 
failure. The firm should consider factors such as business activities; 
banking group structures and booking models and practices; and 
potential sales, transfers, or wind-downs during resolution. The Plan 
should describe how the firm's legal entity structure aligns core 
business lines and any identified critical operations with the firm's 
material entities to support the firm's resolution strategy. To the 
extent a material entity IDI relies upon an affiliate that is not the 
IDI's subsidiary during resolution, including for the provision of 
shared services, the firm should discuss its rationale for the legal 
entity structure and associated resolution risks and potential 
mitigants.
    The firm's corporate structure and arrangements among legal 
entities should be considered and maintained in a way that facilitates 
the firm's resolvability as its activities, technology, business 
models, or geographic footprint change over time.

VII. Insured Depository Institution Resolution

MPOE
    Least-cost requirement analysis. If the Plan includes a strategy 
that contemplates the separate resolution of a U.S. IDI that is a 
material entity, the Plan should explain how the resolution could be 
achieved in a manner that is consistent with the overall objective of 
the Plan to substantially mitigate the risk that the failure of the 
specified firm would have serious adverse effects on financial 
stability in the United States while also complying with the statutory 
and regulatory requirements governing IDI resolution.
    This explanation does not include an expectation that firms provide 
a complete least-cost analysis. A complete least-cost analysis would, 
for example, include a comparison of the preferred strategy for 
resolving an IDI that is a material entity against every other possible 
resolution method available for that IDI.
    To explain how a firm's preferred strategy could potentially enable 
the FDIC to resolve the failed bank in a manner consistent with the 
FDIC's statutory least-cost requirement, the firm could instead compare 
the estimated costs to the DIF of the firm's preferred resolution 
strategy to a payout liquidation and, for strategies involving a BDI, 
explain how the inclusion or exclusion of uninsured deposits within the 
BDI would impact the estimated overall costs to the DIF.
    Firms should address the following matters as applicable to their 
strategy:
     Payout Liquidation: If the Plan envisions a payout 
liquidation for the IDI, with or without use of a Deposit Insurance 
National Bank or a paying agent, the Plan should explain how the 
deposit payout and asset liquidation process would be executed in a 
manner that substantially mitigates the risk of serious adverse effects 
on U.S. financial stability.
     P&A Transaction: If the Plan assumes a weekend P&A 
strategy, the plan should first demonstrate the ready availability of 
this option under severely adverse economic scenario, assuming that 
markets are functioning and competitors are in a position to take on 
business. The Plan may demonstrate a weekend P&A strategy is available 
by discussing evidence of several potential buyers supported by 
information

[[Page 66411]]

indicating that these potential buyers could reasonably be expected to 
have sufficient financial resources to complete the transaction in a 
severely adverse scenario and the expertise to incorporate the business 
of the failed bank. The plan should also address how such a merger can 
be completed with these potential acquirers considering any applicable 
approvals that would be required for the proposed transaction. 
Additionally, a P&A strategy should explain how it either (1) results 
in no loss to the DIF or (2) despite its resulting in a loss to the 
DIF, the loss is less than would be incurred through a payout 
liquidation.
     All-Deposit BDI: If the Plan contemplates a strategy 
involving an all-deposit BDI, the Plan should include an analysis that 
shows that the incremental estimated cost to the DIF of transferring 
all uninsured deposits to the BDI is offset by the preservation of 
franchise value and other benefits connected to the uninsured deposits 
(such as the franchise value derived from retaining full banking 
relationships).
     BDI with Partial Uninsured Deposit Transfers: A Plan may 
demonstrate the feasibility of a strategy involving a BDI that assumes 
(1) all insured deposits or (2) only a portion of uninsured deposits 
(e.g. an advance dividend to uninsured depositors for a portion of 
their deposit claim) by showing that the incremental estimated cost to 
the DIF of transferring the portion of uninsured deposits to the BDI is 
offset by the preservation of franchise value connected to those 
uninsured deposits (such as the franchise value derived from retaining 
full banking relationships).
    In all cases, the Plan should discuss how the implementation of the 
Plan's resolution strategy, including the impact on any depositors 
whose accounts are not transferred in whole or in part to a BDI, would 
not be likely to create the risk of serious adverse effects on U.S. 
financial stability.
    Valuation. Regardless of the strategy chosen, the Plan should 
demonstrate reasonable and well-supported assumptions that support the 
valuation of the failed IDI's assets and business franchise under the 
firm's preferred strategy that are drawn from comparable transactions 
or other inputs observable in the marketplace. A firm's franchise value 
is generally understood to be the value of the bank as an operating 
company relative to the value of the firm's individual assets minus its 
liabilities. In assessing the franchise value of the firm's business, 
the Plan could provide support through relevant inputs such as the 
revenue generated by the account relationships; the efficiencies in 
administrative costs associated with servicing large deposits/large 
relationships; the elimination of barriers to entry or the reduction in 
customer acquisition costs; growth history and prospects for the 
products or business activity; market trading or sales multiples; or 
any other factors the firm believes appropriate. Asset values should be 
representative of the bank's asset mix under the appropriate economic 
conditions and of sufficient distress as to result in failure.
    Exit from BDI. A Plan should include a discussion of the eventual 
exit from the BDI. A Plan could support the feasibility of an exit 
strategy by, for example, describing an actionable process, based on 
historical precedent or otherwise supportable projections, that winds 
down certain businesses, includes the sale of assets and the transfer 
of deposits to one or multiple acquirers, or culminates in a capital 
markets transaction, such as an initial public offering or a private 
placement of securities.

VIII. Format and Structure of Plans; Assumptions

SPOE & MPOE
Format of Plan
    Executive Summary. The Plan should contain an executive summary 
consistent with the Rule, which must include, among other things, a 
concise description of the key elements of the firm's strategy for an 
orderly resolution. In addition, the executive summary should include a 
discussion of the firm's assessment of any impediments to the firm's 
resolution strategy and its execution, as well as the steps it has 
taken to address any identified impediments.
    Narrative. The Plan should include a strategic analysis consistent 
with the Rule. This analysis should take the form of a concise 
narrative that enhances the readability and understanding of the firm's 
discussion of its strategy for an orderly resolution in bankruptcy or 
other applicable insolvency regimes (Narrative).
    Appendices. The Plan should contain a sufficient level of detail 
and analysis to substantiate and support the strategy described in the 
Narrative. Such detail and analysis should be included in appendices 
that are distinct from and clearly referenced in the related parts of 
the Narrative (Appendices).
    Public Section. The Plan must be divided into a public section and 
a confidential section consistent with the requirements of the Rule.
    Other Informational Requirements. The Plan must comply with all 
other informational requirements of the Rule. The firm may incorporate 
by reference previously submitted information as provided in the Rule.
Guidance Regarding Assumptions
    1. The Plan should be based on the current state of the applicable 
legal and policy frameworks. Pending legislation or regulatory actions 
may be discussed as additional considerations.
    2. The firm must submit a Plan that does not rely on the provision 
of extraordinary support by the United States or any other government 
to the firm or its subsidiaries to prevent the failure of the firm.\26\ 
The firm should not submit a Plan that assumes the use of the systemic 
risk exception to the least-cost test in the event of a failure of an 
IDI requiring resolution under the FDI Act.
---------------------------------------------------------------------------

    \26\ 12 CFR 243.4(h)(2) and 381.4(h)(2).
---------------------------------------------------------------------------

    3. The firm should not assume that it will be able to sell 
identified critical operations or core business lines, or that 
unsecured funding will be available immediately prior to filing for 
bankruptcy.
    4. The Plan should assume the Dodd-Frank Act Stress Test (DFAST) 
severely adverse scenario for the first quarter of the calendar year in 
which the Plan is submitted is the domestic and international economic 
environment at the time of the firm's failure and throughout the 
resolution process.
    5. The resolution strategy may be based on an idiosyncratic event 
or action, including a series of compounding events. The firm should 
justify use of that assumption, consistent with the conditions of the 
economic scenario.
    6. Within the context of the applicable idiosyncratic scenario, 
markets are functioning and competitors are in a position to take on 
business. If a firm's Plan assumes the sale of assets, the firm should 
take into account all issues surrounding its ability to sell in market 
conditions present in the applicable economic condition at the time of 
sale (i.e., the firm should take into consideration the size and scale 
of its operations as well as issues of separation and transfer.).
    7. For a firm that adopts an MPOE resolution strategy, the Plan 
should demonstrate and describe how the failure event(s) results in 
material financial distress.\27\ In particular, the Plan should 
consider the likelihood that there would be a diminution of the firm's 
liquidity buffer in the stress

[[Page 66412]]

period prior to filing for bankruptcy from high unexpected outflows of 
deposits and increased liquidity requirements from counterparties. 
Though the immediate failure event may be liquidity-related and 
associated with a lack of market confidence in the financial condition 
of the covered company or its material legal entity subsidiaries prior 
to the final recognition of losses, the demonstration and description 
of material financial distress may also include depletion of capital. 
Therefore, the Plan should also consider the likelihood of the 
depletion of capital.
---------------------------------------------------------------------------

    \27\ See Section 11(c)(5) of the FDI Act, codified at 11 U.S.C. 
1821(c)(5), which details grounds for appointing the FDIC as 
conservator or receiver of an IDI.
---------------------------------------------------------------------------

    8. The firm should not assume any waivers of section 23A or 23B of 
the Federal Reserve Act in connection with the actions proposed to be 
taken prior to or in resolution.
    9. The Plan should support any assumptions that the firm will have 
access to the Discount Window and/or other borrowings during the period 
immediately prior to entering bankruptcy. To the extent the firm 
assumes use of the Discount Window, Federal Home Loan Banks, and/or 
other borrowings, the Plan should support that assumption with a 
discussion of the operational testing conducted to facilitate access in 
a stress environment, placement of collateral, and the amount of 
funding accessible to the firm. The firm may assume that its depository 
institutions will have access to the Discount Window only for a few 
days after the point of failure to facilitate orderly resolution. 
However, the firm should not assume its subsidiary depository 
institutions will have access to the Discount Window while critically 
undercapitalized, in FDIC receivership, or operating as a bridge bank, 
nor should it assume any lending from a Federal Reserve credit facility 
to a non-bank affiliate.
    Financial Statements and Projections. The Plan should include the 
actual balance sheet for each material entity and the consolidating 
balance sheet adjustments between material entities as well as pro 
forma balance sheets for each material entity at the point of failure 
and at key junctures in the execution of the resolution strategy. It 
should also include statements of projected sources and uses of funds 
for the interim periods. The pro forma financial statements and 
accompanying notes in the Plan should clearly evidence the failure 
trigger event; the Plan's assumptions; and any transactions that are 
critical to the execution of the Plan's preferred strategy, such as 
recapitalizations, the creation of new legal entities, transfers of 
assets, and asset sales and unwinds.
    Material Entities. Material entities should encompass those 
entities, including foreign offices and branches, which are significant 
to the maintenance of an identified critical operation or core business 
line. If the abrupt disruption or cessation of a core business line 
might have systemic consequences to U.S. financial stability, the 
entities essential to the continuation of such core business line 
should be considered for material entity designation. Material entities 
should include the following types of entities:
    1. Any U.S.-based or non-U.S. affiliates, including any branches, 
that are significant to the activities of an identified critical 
operation.
    2. Subsidiaries or foreign offices whose provision or support of 
global treasury operations, funding, or liquidity activities (inclusive 
of intercompany transactions) is significant to the activities of an 
identified critical operation.
    3. Subsidiaries or foreign offices that provide material 
operational support in resolution (key personnel, information 
technology, data centers, real estate or other shared services) to the 
activities of an identified critical operation.
    4. Subsidiaries or foreign offices that are engaged in derivatives 
booking activity that is significant to the activities of an identified 
critical operation, including those that conduct either the internal 
hedge side or the client-facing side of a transaction.
    5. Subsidiaries or foreign offices engaged in asset custody or 
asset management that are significant to the activities of an 
identified critical operation.
    6. Subsidiaries or foreign offices holding licenses or memberships 
in clearinghouses, exchanges, or other FMUs that are significant to the 
activities of an identified critical operation.
    For each material entity (including a branch), the Plan should 
enumerate, on a jurisdiction-by-jurisdiction basis, the specific 
mandatory and discretionary actions or forbearances that regulatory and 
resolution authorities would take during resolution, including any 
regulatory filings and notifications that would be required as part of 
the preferred strategy, and explain how the Plan addresses the actions 
and forbearances. The Plan should describe the consequences for the 
covered company's resolution strategy if specific actions in a non-U.S. 
jurisdiction were not taken, delayed, or forgone, as relevant.

IX. Public Section

SPOE & MPOE
    The purpose of the public section is to inform the public's 
understanding of the firm's resolution strategy and how it works.
    The public section should discuss the steps that the firm is taking 
to improve resolvability under the U.S. Bankruptcy Code. The public 
section should provide background information on each material entity 
and should be enhanced by including the firm's rationale for 
designating material entities. The public section should also discuss, 
at a high level, the firm's intra-group financial and operational 
interconnectedness (including the types of guarantees or support 
obligations in place that could impact the execution of the firm's 
strategy).
    The discussion of strategy in the public section should broadly 
explain how the firm has addressed any deficiencies, shortcomings, and 
other key vulnerabilities that the agencies have identified in prior 
plan submissions. For each material entity, it should be clear how the 
strategy provides for continuity, transfer, or orderly wind-down of the 
entity and its operations. There should also be a description of the 
resulting organization upon completion of the resolution process.
    The public section may note that the Plan is not binding on a 
bankruptcy court or other resolution authority and that the proposed 
failure scenario and associated assumptions are hypothetical and do not 
necessarily reflect an event or events to which the firm is or may 
become subject.

    By order of the Board of Governors of the Federal Reserve 
System.
Ann E. Misback,
Secretary of the Board.
Federal Deposit Insurance Corporation.

    By order of the Board of Directors.

    Dated at Washington, DC, on August 9, 2024.
James P. Sheesley,
Assistant Executive Secretary.
[FR Doc. 2024-18191 Filed 8-14-24; 8:45 am]
BILLING CODE 6210-01-P; 6714-01-P