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December 11, 2013

Title I Resolution Plans
Background

• Under the Dodd-Frank Act (“DFA”), bankruptcy is the first 

option in the event of a failure of a systemic financial company

• DFA requires all large, systemic financial companies submit 

living wills annually to demonstrate how they would be 

resolved under the bankruptcy code.

• Submission must describe their plan for rapid and orderly 

resolution under the U.S. Bankruptcy Code or other relevant 

insolvency regime (e.g., SIPA) in the event of material financial 

distress or failure.

• Federal Reserve and FDIC may find a plan is not credible or 

would not facilitate an orderly resolution in bankruptcy

• Plan may not rely on extraordinary government support

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Objectives of Initial Resolution Plans

• Identify each firm’s critical operations and its strategy to maintain 

them in a crisis situation

• Map critical operations and core business lines to material legal 

entities

• Map cross-guarantees, service level agreements, shared 

employees, intellectual property, and vendor contracts across 

material legal entities

• Identify and improve understanding of the resolution regimes for 

material legal entities

• Identify key obstacles to rapid and orderly resolution

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Plan Submission Schedule

• First Wave Filers: 

• Eleven firms submitted firm-developed resolution plans in 2012

• July 1, 2012: Bank of America, Citigroup, JP Morgan Chase, 

Goldman Sachs, Morgan Stanley, Deutsche Bank, UBS, 

Credit Suisse, and Barclays

• October 1, 2012: Bank of New York Mellon, State Street 

• Second Wave Filers: 

• Four firms submitted plans on July 1, 2013

• Third Wave Filers:

• 117 firms are expected to file on December 31, 2013

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2013 Guidance: Obstacles

• Following review of the initial resolution plans, the Federal 

Reserve and FDIC provided additional guidance for the first 

group of 11 institutions that filed their resolutions plans in 

2012 as to what should be included in their 2013 

submissions.

• The agencies identified an initial set of significant Obstacles 

to Rapid and Orderly Resolution to be addressed in the 

plans, including actions or steps taken or proposed with 

timelines to remediate or otherwise mitigate each Obstacle.

• This set of Obstacles includes:

• Multiple Competing Insolvencies

• Global Cooperation

• Operations and Interconnectedness

• Counterparty Actions, and

• Funding and Liquidity.

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2013 Guidance: Resolution Strategies

• Permissible Resolution Strategies:

• Failure of all Material Entities (as in 2012)

• Bankruptcy of parent (or U.S. parent) holding company and 

limited number of other entities (Single Point of Entry Strategy)

• Failure of Material Entities where firm is compartmentalized in 

manner that mitigates the risk that such failures would result in 

other Material Entities entering resolution regimes.

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2013 Plan Review Process

• The eleven firms that submitted initial resolution plans 

in 2012 submitted their second submission on October 

1, 2013.

• The plans are currently being reviewed for resolvability 

using the 2013 guidance and whether the plans 

overcome each of the five obstacle categories as 

benchmarks.

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2013 FSOC Non-Bank Designations

• In July, 2013, FSOC made final designation of 

American International Group, Inc. and General 

Electric Capital Corporation, Inc. for consolidated 

supervision and enhanced prudential standards. 

• In September, 2013, FSOC made final designation of 

Prudential Financial, Inc.

• Under 165(d) rule these three firms are required to 

submit initial resolution plans by July 1, 2014.

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