FDIC Finalizes New Rule on Resolution Plans for Large Banks
FDIC Finalizes New Rule on Resolution Plans for Large Banks
In a move aimed at preventing future financial crises and protecting the American public, the Federal Deposit Insurance Corporation (FDIC) has finalized a new rule on resolution plans for large banks. The rule, which was approved today, requires large banks to prepare and maintain robust resolution plans to prevent defaults or takeovers that could endanger the entire financial system.
Shayna Olesiuk, Director of Banking Policy, emphasized the importance of such planning, citing past failures and bailouts of banks like Silicon Valley Bank, First Republic Bank, and Signature Bank. Olesiuk stated that these failures could have been avoided if the banks had current, workable resolution plans in place.
While the final rule approved by the FDIC today makes some improvements to increase the information that banks must provide, Olesiuk expressed disappointment that the rule only requires banks to file resolution plans every three years. She argued that more frequent filings are necessary to prevent delays and data gaps that could threaten financial stability.
The new rule comes in the wake of recent failures of banks that had filed resolution plans shortly before their collapse, but had not received feedback from the FDIC. Olesiuk warned that without proper oversight and more frequent filings, similar failures could continue to pose a risk to the financial system.
Better Markets, a non-profit organization dedicated to promoting the public interest in financial markets, has expressed support for the FDIC’s efforts to strengthen resolution planning for large banks. The organization works to advocate for policies that protect Americans’ jobs, savings, and retirements in the financial system.
For more information on the new rule and Better Markets’ stance, visit www.bettermarkets.org.
