SYSTEMIC

RESOLUTION 

ADVISORY COMMITTEE

Resolution Framework for Global 

Systemically Important Banks 
SYSTEMIC

RESOLUTION 

ADVISORY COMMITTEE

Overview

2020 SRAC 18

The Single Point of Entry (SPoE) strategy remains the foundational framework 

for resolving GSIBs, bolstered by 10 years of domestic and international policy 

and planning developments.

FDIC readiness efforts in recent years have focused on operationalization and 

testing of key Orderly Liquidation Authority (OLA) readiness processes:

• Liquidity analysis and funding operations

• Coordinating entry into resolution

• Bridge governance and oversight
SYSTEMIC

RESOLUTION 

ADVISORY COMMITTEE

Maturation of SPoE

2020 SRAC 19

Adoption of the SPoE strategy across regimes has created planning synergies 

and facilitated coordination:

• Title I planning for SPoE in bankruptcy (all eight U.S. GSIBs)

• Foreign jurisdictions adopting variants of the SPoE “bail-in” strategy

Policy developments and structural changes post-2008 have addressed several 

core challenges to resolution:

• Loss absorbency: clean holding company and TLAC requirements

• Financial contract termination: ISDA resolution stay protocol

• Industry resolution planning: legal entity rationalization, operational 

continuity, and resolution capabilities
SYSTEMIC

RESOLUTION 

ADVISORY COMMITTEE 2020 SRAC 20

BAU Initiate Contingency Planning

Significant impairment, adverse 

market reaction

Prepare for Resolution

Loss of market confidence, 

failure imminent 

Stabilization from Market Opening

Monitor firm condition and market 

response, make adjustments as needed

Immediate Post-Entry Actions

Preparing to resume activity at 

market opening

Enter into Resolution

FDIC appointed, BFC 

formed, iTLAC converted

Recovery

Preparation for Possible Bankruptcy (Title I)

A

Market Confidence

BAU Stress Recovery Runway Entry Stabilization Restructuring and Exit

Title II Planning and Execution

0

B C D

E

Illustrative Crisis Continuum: Title II Scenario
SYSTEMIC

RESOLUTION 

ADVISORY COMMITTEE

FDIC Readiness: Liquidity and Funding Needs

2020 SRAC 21

GSIB resolution liquidity modeling capabilities (Resolution Liquidity Execution Need 

(RLEN)) provide a mechanism for projecting liquidity needs in Title II.

• The Title I liquidity triggers will inform FDIC escalation actions and timing of entry

• The FDIC has developed approaches for adapting RLEN models for Title II 

scenarios

Ongoing interagency work is conducted to maintain preparedness for operationalizing 

the Orderly Liquidation Fund, including through a recent interagency simulation:

• Drafted and exchanged examples of statutorily required funding documents

• Tested funding processes and systems; simulated disbursements

• Practiced interagency coordination and communication
SYSTEMIC

RESOLUTION 

ADVISORY COMMITTEE

FDIC Readiness: Coordinating Entry Into Resolution

2020 SRAC 22

The U.S. authorities coordinate regularly on GSIB resolution planning:

• Joint work with the Federal Reserve on resolution plan review and 

conducting Crisis Management Group meetings

• Periodic refresh of the “3 keys” appointment process 

Authorities in the U.S., UK, and European Banking Union maintain a cross-border 

work program on GSIB resolution focusing on key resolution challenges and 

coordination during “resolution weekend”.

• Seven years of principal and senior staff-level engagement 

• Most recent principal exercise in April 2019; next principal exercise in 2021

• Senior staff-level cross-border simulation to be conducted fall 2020
SYSTEMIC

RESOLUTION 

ADVISORY COMMITTEE

FDIC Readiness: Bridge Governance and Oversight

2020 SRAC 23

In an OLA resolution a Bridge Financial Company chartered by the FDIC will be 

led by directors and officers approved by FDIC, subject to certain controls 

established upon the formation of the Bridge.

The FDIC maintains an executive search program and conducts 

regular outreach to identify qualified candidates for executive and board member 

positions.

The FDIC recently conducted an internal Bridge formation simulation, 

completing the chartering process, requisite legal documents, and associated 

board cases for a selected U.S. GSIB.
SYSTEMIC

RESOLUTION 

ADVISORY COMMITTEE

Bridge Governance Paradigm

2020 SRAC 24

Balanced Approach

FDIC retains

key controls

Approval of:

• Orderly Liquidation Plan (OLP) for reorganization of the Bridge

• Amendments to articles of association and bylaws

• Bridge Board of Directors

• Appointment of CEO or other designated senior executive officers

• Material divestitures

• Any mergers, consolidation or reorganization of Bridge

• Oversight of funding plan, including approach to use of Orderly Liquidation Fund (OLF), if necessary

• Independent auditor, valuation consultant

New Bridge Board

and CEO oversee

day-to-day operations

• Manage operations consistent with governing documents and OLP

• Continued oversight of subsidiaries, which continue to operate under their existing regulatory structures

• Retain approved consultants for valuation and audits

• Manage funding and make intercompany advances

• Hire and terminate officers and employees (other than designated key officers)