The FDIC and Federal Reserve Board (collectively, the "agencies") found that the resolution plans (the "plans") of four foreign-based banks had "shortcomings" in how each bank communicated and coordinated between its U.S. operators and foreign parent "in stress." Separately, the agencies adopted final resolution plan "guidance for the 2019 and subsequent resolution plan submissions by the eight largest, complex U.S. banking organizations."
Pursuant to the Dodd-Frank Act, resolution plans are mandated and must outline a company's strategy for a resolution under bankruptcy "in the event of material financial distress or failure." Resolution plans for foreign banking organizations are focused specifically on their U.S. operations. The agencies detailed the specific actions each bank can take to address "shortcomings," which must be noted in the next resolution plans that are due on July 1, 2020.
With regard to the agencies' adopted final resolution plan guidance, the agencies stated, the final guidance is intended to aid these banks in developing their resolution plans. In particular, the final resolution plan guidance discusses the agencies' expectations about a number of vulnerabilities in plans for "an orderly resolution under the U.S. bankruptcy code."
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