Letter to the FDIC on IDI Resolution Planning

Ladies and Gentlemen:

The American Bankers Association (ABA) appreciates the opportunity to share our members' views on the proposed amendments (Proposal) to the resolution planning regulation for large insured depository institutions (CIDIs) by the Federal Deposit Insurance Corporation (FDIC). ABA has been active on behalf of our members in the many policy issues involved in resolution planning since the development of the first requirements under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and FDIC's original IDI resolution planning rule. Though resolution planning has required exhaustive work on the part of both FDIC and the Board of Governors of the Federal Reserve System (Federal Reserve)) and the affected banking organizations, we acknowledge the enhanced resiliency, reduced systemic vulnerability, and enhanced public confidence that those efforts have yielded. Subsequent Congressionally mandated refinements under the Economic Growth, Regulatory Relief, and Consumer Protection Act of 2018 (EGRRCPA), preserved the benefits of those efforts while streamlining the workload by making the requirements more sensitive to risk. FDIC’s policy statement issued in June 2021 (Policy Statement) provided interim adjustments to the existing IDI rule in recognition of Congress’s tailoring objectives.

Given that progress, ABA is concerned that several aspects of the Proposal may compromise those hard-won benefits. We believe that the Proposal would impose some requirements that are impractical, even in light of the many improvements in management information systems, risk governance, corporate structure, and operational resiliency that institutions have achieved since resolution planning commenced. Specifically, ABA is concerned that:

Summary

• The Proposal’s additional required information would extend to information that institutions do not have or control, and the final rule should be modified as described below. Definitions in the Proposal should be made consistent with the parallel definitions in the 165(d) Rule. Similarly, other terms, and the overall application of the 165(d) Rule and a final IDI resolution planning rule, should be consistent.
• The Proposal’s revised credibility determination is not feasible absent reliance on assumptions that Group A CIDIs would be unable to verify. The possibility of an enforcement action, preceded by at most limited feedback from FDIC following the plan's initial submission, creates an unacceptably arbitrary compliance obligation when other approaches (discussed below) would yield practical and useful results.
• The Proposal raises similar concerns with respect to capabilities testing, but, again, changes in the proposed process discussed below would be beneficial without compromising the practical benefits of the resolution plan.
• Any individualized FDIC feedback on resolution plans should be treated as confidential supervisory information and not publicized, except to facilitate coordination between home and host country resolution planning where applicable. Broad-based industry guidance, however, should be made publicly available with an opportunity for prior notice and comment.

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