New RRP guidance: threat or opportunity?
In December 2014, the Federal Deposit Insurance Corporation (FDIC) released guidance on resolution plans for insured depository institutions with assets greater than $50 billion.
Why is this a big deal?
When the Dodd Frank act was first introduced, there was limited direct guidance on all of the individual strategies that should be included in the resolution plan.
According to the new guidance, each banking institution should include a discussion and analysis of:
- A wide range of realistic resolution strategies
- At least one strategy that describes the separation and sale of the deposit franchise, core business lines, and major assets
- A second strategy about the liquidation of the firm—including the payout of insured deposits
The new guidance encourages banks to perform a cost analysis to propose reasonable resolution options and demonstrate how one option is least costly—relative to the cost of liquidation or the cost of other resolution methods.
Banks should also describe the relationship of each identified obstacle to its resolution strategy and discuss the actions or steps it has taken, or proposes to take, within a reasonable timeline.
With clearer guidance from the FDIC on what they want to see in your resolution plan, you can get your capital assets in order.
This is your opportunity.
To get the full press release and guidance, click here.