04 Sep SIFMA – Resolution Planning for Large International Banks: Considerations for the Federal Reserve and the FDIC on FBO guidance

September 4, 2020 –

Key Takeaways

Follows FRB and FDIC March 2020 proposed resolution plan guidance for firms which includes newly proposed foreign banking organizations (FBO) methodology with expectations to align with resolution planning guidance for US G-SIBs. Ignores the growing divergence in size and risk profile of these two sets of institutions. Discounts progress of specified FBOs in ensuring they are resolvable in event of failure. Fails to recognize the US resolution plan is a back-up plan to global single-point-of-entry (SPOE) plan, for success premised on cooperation with FBO home country regulator. The article stated agencies should reconsider the proposed guidance as currently written. Recommended adoption of different scoping mechanism for accuracy in systemic risk. Tailor expectations to reflect the divergent profile of the institutions relative to US GSIBs.

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