Resolution Planning: OCC’s Proposed Rule vs. FDIC’s Final Rulemaking

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The Federal Deposit Insurance Corporation (FDIC) has recently approved a final rule to enhance the resolution planning for insured depository institutions with assets totaling at least $50 billion. Concurrently, the Office of the Comptroller of the Currency (OCC) has requested public comments on a proposed rulemaking and policy statement aimed at updating its rules for business combinations involving national banks and federal savings associations. This proposal signifies a significant step towards strengthening the oversight and planning for potential financial distress and failures within the banking sector.


Key Differences and Nuances

  1. Asset Threshold:
    • OCC: Focuses on banks with $100 billion or more, lowering the previous threshold from $250 billion.
    • FDIC: Differentiates between banks with $50-$100 billion and those with $100 billion or more, applying varying requirements accordingly.
  2. Filing Frequency:
    • OCC: Requires annual testing and plan updates.
    • FDIC: Uses a tiered approach with biennial and triennial cycles, including annual interim supplements for Group B banks.
  3. Content Requirements:
    • OCC: Emphasizes recovery plans with triggers, recovery options, and impact assessments, incorporating both financial and non-financial risks.
    • FDIC: Requires more detailed descriptions of funding sources, capital structure, and critical services, with a focus on cross-border activities and key depositors.
  4. Non-Financial Risks:
    • OCC: Explicitly incorporates non-financial risks (operational and strategic) into recovery planning, ensuring that these risks are considered alongside financial risks.
    • FDIC: Also addresses non-financial risks but places additional emphasis on operational continuity and critical service providers.
  5. Regulatory Approach:
    • OCC: Focuses on continuous improvement through regular testing and feedback.
    • FDIC: Emphasizes engagement, capabilities testing, and ensuring overall readiness for resolution.

Nuances to Consider

  1. Testing Requirements:
    • The OCC’s proposed rule introduces a more rigorous testing requirement for recovery plans, which could require banks to simulate a broader range of stress scenarios, including non-financial ones. Banks should prepare for more detailed and frequent testing of their recovery plans.
  2. Compliance Dates:
    • Both agencies provide specific timelines for compliance. The OCC’s rule requires banks to comply with testing requirements within 18 months, while the FDIC’s timelines vary based on the institution’s size and complexity.
  3. Regulatory Coordination:
    • Banks should be aware of the potential for overlapping requirements and ensure that their recovery and resolution plans are aligned with both OCC and FDIC expectations. Coordination between different regulatory requirements will be critical to avoid conflicts and ensure comprehensive compliance.

How Treliant Can Help

Treliant understands the preparation/planning needed for conformance with the revised rule and can assist with:

  • Identifying the additional requirements from existing plans to full plans and prioritizing the incremental work that needs to be done.
  • Identifying and documenting organizational structure.
  • Assisting with the development of process diagrams to identify people, process, and technologies to deliver critical services through material legal entities.
  • Credible challenge for identified strategies and failure scenarios.
  • Drafting of executive summary/challenge of existing executive summaries.
  • Evaluating assumptions and/or overall approach.
  • Comprehensive review of impact assessments.
  • Assessment of capital and liquidity calculations and related governance.

Ready to Talk?

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Laura Huntley

Laura Huntley is a Managing Director in Treliant’s Regulatory Compliance, Mortgage, and Operations Solutions practice. Laura brings almost two decades of specialized experience in regulatory strategy, compliance, and risk management within the financial services industry. Beginning her career as a practicing attorney, she honed her expertise in regulatory compliance and…

Mike Scarpa

Mike Scarpa is a Managing Director in Treliant’s Regulatory Compliance, Mortgage, and Operations Solutions practice. He helps set Treliant’s regulatory compliance/operations agenda, including key trends, solution offerings, and client pursuits. He also executes on regulatory compliance projects and serves as a subject matter expert.