147

October 1, 2020

The Meeting of the Systemic Resolution Advisory Committee

of the

Federal Deposit Insurance Corporation

Federal Deposit Insurance Corporation Building

Washington, D.C.

Open to Public Observation Via Webcast

October 1, 2020 – 9:00 A.M.

The meeting of the FDIC Systemic Resolution Advisory Committee (“Committee”) was 

called to order by Jelena McWilliams, Chairman of the Board of Directors, Federal Deposit 

Insurance Corporation (“Corporation” or “FDIC”).

The members of the Committee present at the meeting were: 

Sheila Bair, Former Chairman, Federal Deposit Insurance Corporation; Dr. Ben S. Bernanke, 

Distinguished Fellow in residence with the Economic Studies Program at the Brookings 

Institution, Former Chairman of the Board of Governors of the Federal Reserve System; Michael 

Bodson, President and Chief Executive Officer, Depository Trust & Clearing Corporation; 

Honorable Shelley C. Chapman, United States Bankruptcy Judge, Southern District of New 

York; H. Rodgin Cohen , Senior Chairman, Sullivan & Cromwell LLP; Gary Cohn, Former 

Assistant to the President for Economic Policy and Director of the National Economic Council; 

Robert Drain, United States Bankruptcy Judge, Southern District of New York; Peter R. Fisher, 

Senior Fellow, Center for Global Business and Government at the Tuck School of Business at 

Dartmouth University; Richard J. Herring, Co-Director, The Wharton Financial Institutions 

Center and Professor of Finance, The Wharton School, University of Pennsylvania; Donald 

Kohn, Former Vice Chairman, Board of Governors of the Federal Reserve System and Senior 

Fellow, Economic Studies Program, Brookings Institution; Timothy J. Mayopoulos, President of 

Blend, Former President and Chief Executive Officer of Fannie Mae; Sandie O’Connor, Former 

Chief Regulatory Affairs Officer for JPMorgan Chase & Co.; Douglas L. Peterson, President and 

Chief Executive Officer, S&P Global; John S. Reed, Former Chairman and CEO of Citigroup 

and Former Chairman, Corporation of Massachusetts Institute of Technology; and Gary H. Stern, 

Former CEO and President, Federal Reserve Bank of Minneapolis and Presiding Director and 

Chair of the Board Risk Committee at the Depository Trust;

Member William H. Donaldson, Former Chairman, U.S. Securities and Exchange 

Commission, was absent from the meeting.

Members of the Corporation’s Board of Directors present at the meeting were: Jelena 

McWilliams, Chairman, and Martin J. Gruenberg, Director (Appointive).
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October 1, 2020

Corporation staff who attended the meeting included: Alexandra S. Barrage, Rebecca 

Bittle, Alys V. Brown, Jason C. Cave, Bob Charurat, Carolyn D. Curran, BalKrishna N. Dave, 

Chad R. Davis, Ricardo R. Delfin, Elizabeth Falloon, Thomas D. Foreman, Joanne Fungaroli, 

Jasa J. Gitomer, Patricia S. Gurneau, Leon Hartley, Travis R. Hill, Krista Hughes, David C. 

Johnson, Andrew T. Karp, Nicholas S. Kazmerski, Christopher Lucas, James L. McGraw, 

Brandon Milhorn, Patrick M. Mitchell, Arthur J. Murton, Julia E. Paris, Eric Parker, Nicholas J. 

Podsiadly, Lori J. Quigley, Joanne W. Rose, Alfred L. Seivold, Jo Sims, Richard P. Starke, Ryan 

P. Tetrick, Jenny G. Traille, David Wall, Smith T. Williams, and Aaron W. Wishart.

Introductory Remarks

Chairman McWilliams opened and presided at the meeting. She began by recognizing the 

passing of Paul Volcker, former Chair of the Federal Reserve and original member of the 

Committee, in late 2019. The Chairman noted the Committee was founded in 2011 to bring 

together experts in the field to help the FDIC achieve its systemic resolution mission. 

Chairman McWilliams welcomed five new members to the Committee: Dr. Ben S. Bernanke, 

Gary Cohn, Hon. Robert Drain, Timothy J. Mayopoulos, and Sandie O’Connor. Dr. Bernanke is 

a Distinguished Fellow in residence with the Economic Studies Program at the Brookings 

Institution and Former Chairman of the Board of Governors of the Federal Reserve System. Mr. 

Cohn was the former assistant to the President for Economic Policy and Director of the National 

Economic Council. The Honorable Robert Drain is a United States Bankruptcy Judge for the 

Southern District of New York. Mr. Mayopoulos is the President of Blend and previously served 

as the Former President and Chief Executive Officer of Fannie Mae. Ms. O’Connor is the 

Former Chief Regulatory Affairs Officer for JPMorgan Chase & Co. Chairman McWilliams then 

thanked and welcomed back the returning members of the Committee.

Chairman McWilliams introduced Ricardo Delfin, Director, Division of Complex Institution 

Supervision & Resolution to moderate the meeting. Mr. Delfin began by explaining that the 

purpose of the meeting was to update the Committee on the FDIC’s efforts regarding systemic 

resolution. He provided general background information regarding resolution plans and the 

Orderly Liquidation Authority (“OLA”) under Title II of the Dodd-Frank Act and the FDIC’s 

role in systemic resolution. Mr. Delfin observed that the Committee has been very helpful in 

thinking through the challenges associated with the resolution of systemically important financial 

institutions and that the FDIC looks forward to further exploring these issues with the 

Committee.

Mr. Delfin next discussed the evolution of the Committee’s subject matter since 2011, noting the

establishment of the OLA, the development of the Single Point of Entry (“SPoE”) strategy, and 

implementation of a series of structural reforms such as the total loss absorbing capacity

(“TLAC”) requirement. He stated engagement with the Committee and the Federal Reserve

Board (“FRB”) has allowed the FDIC to make many improvements in the area of systemic 

resolution. He noted that the advice of the Committee contributed to the decision to combine

resolution planning under the Bankruptcy Code and the OLA. He also stated that there has been 
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a shift in resolution planning from focusing on hypothetical resolution test scenarios to 

measuring resolution capabilities. 

Mr. Delfin described the internal changes the FDIC has made to improve its systemic resolution 

capabilities, highlighting the creation of the Division of Complex Institution Supervision & 

Resolution (“CISR”) in July 2019. He explained that the creation of CISR simplifies FDIC 

structures to enhance supervision of and resolution preparedness for complex financial 

institutions, bolsters cross-border planning capabilities, and leverages skill sets. 

Session 1: Resolution Planning Under Bankruptcy 

Mr. Delfin introduced Lori Quigley, Corporate Expert, CISR and Jason Cave, Corporate Expert, 

CISR to discuss Title I developments since the Committee’s last meeting in 2018. 

After Ms. Quigley provided general information on the resolution plan review process conducted 

by the FDIC and FRB, Mr. Cave discussed in detail the review process for 2019, the first year 

the FDIC began capabilities testing. Mr. Cave provided some highlights from the feedback 

letters sent to firms in this cycle. He noted that there were no deficiencies among the firms, but 

there were certain firm shortcomings regarding governance capabilities in times of stress. 

Further, he said the U.S. Global Systemically Important Banks (“G-SIBs”) made significant 

progress across financial and operational capabilities generally and various firms made 

meaningful improvements since 2017 to address firm-specific shortcomings. 

Ms. Quigley next discussed critical operations determinations. She explained critical operations 

are those operations at certain firms whose failure or discontinuance would threaten U.S. 

financial stability. She explained critical operations are identified either through a firm’s internal 

processes or jointly by the FDIC and FRB. She stated the critical operations determination is an 

important aspect of the Title I process, but it can also be used to inform Title II readiness. She 

noted the agencies will refresh critical operations determinations every six years. 

Ms. Quigley then discussed the amended resolution plan rule, which became effective December 

31, 2019. She stated the amended rule introduced a graduated set of requirements under which 

plan content and submission frequency are differentiated based on a firm’s size and risk to the 

U.S. financial system. To do this, she explained, the amended rule created three filing groups: 

biennial filers, triennial filers, and triennial reduced filers. A firm’s group, she said, determines 

its resolution plan submission schedule and plan content requirements. Ms. Quigley added that 

the amended rule creates three types of resolution plans: full plan, targeted plan, and reduced 

plan. She also noted the amended rule increased the asset threshold of firms for coverage under 

the rule. 

Ms. Quigley and Mr. Cave then turned the presentation over to Jim McGraw, Deputy Director of 

Risk Assessment, CISR, who addressed the lessons learned from the market volatility caused by 

the COVID-19 pandemic. Mr. McGraw began by stating that there had been significant 

supervisory and Title I advances since the passage of the Dodd-Frank Act, as evidenced by 

increases of both capital and liquidity at the beginning of 2020. Mr. McGraw then mentioned 
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that there have also been advances in the Title I living wills, particularly in the areas of

governance, liquidity, and operations.

Turning to the COVID-19 pandemic specifically, Mr. McGraw explained the stress of the 

pandemic suggests changes in future stress testing activities. He noted that, in response to 

COVID-19, firms had taken steps to remove redundancies to ensure workflows are less complex 

and communication flows are more effective so remote work is feasible. He summarized by 

saying the advances made in regard to Title I resolution plans prior to 2020 had strengthened the 

overall condition and resiliency of firms going into the pandemic, as evidenced by quick 

adaptions at the start of the pandemic.

Session 2: Resolution Planning Under the Orderly Liquidation Authority

Mr. Delfin introduced Ryan Tetrick, Deputy Director for Resolution Readiness, CISR to discuss 

resolution planning under the OLA.

Mr. Tetrick discussed how far the FDIC has come in implementing and operationalizing the 

SPoE strategy, which a bank adopts if it plans for the resolution in its home jurisdiction to bail in 

debt and recapitalize a single parent company, leaving operating subsidiaries to continue 

unaffected, as a strategic framework for G-SIB resolution for both Title I and Title II plans. He 

also noted industry policy developments and structural changes, such as establishment of clean 

holding companies, implementation of TLAC requirements, and legal entity rationalization, have 

supported SPoE strategy implementation. Further, he mentioned many foreign jurisdictions have 

also adopted the SPoE strategy. The Committee then held a discussion concerning issues related 

to the SPoE strategy. 

Mr. Tetrick then discussed the steps the FDIC is taking to operationalize the SPoE strategy. He 

described a general timeline for a hypothetical Title II resolution with FDIC planning 

commencing prior to failure. He indicated that potential timelines for Title II resolutions are 

highly variable, so this preparation may not always be possible.

Mr. Tetrick then turned to the topic of liquidity and funding needs, noting that liquidity will often 

cause G-SIB resolution. He explained the FDIC is utilizing and adapting firm internal G-SIB 

resolution liquidity modeling capabilities to project liquidity needs in resolutions. Further, he 

described a recent interagency simulation of funding the Orderly Liquidation Fund.

Next, Mr. Tetrick discussed coordination among the domestic and foreign authorities. He 

described how plan reviews and Crisis Management Groups have strengthened those

relationships over time. He also stated the FDIC participates in periodic updates of the “Three

Keys” appointment process with the domestic regulators. On the cross-border front, he 

highlighted a program involving the U.S. and U.K. resolution authorities and the European 

Banking Union on G-SIB resolution, which discusses and conducts G-SIB resolution exercises. 

He said that the program has been immensely helpful, yielding a reciprocal relationship among

the authorities. Mr. Tetrick noted that the FDIC is planning on participating in another crossborder simulation of a hypothetical G-SIB resolution this fall. 
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Mr. Tetrick concluded with a discussion of bridge financial company governance and oversight. 

He stated that formation of a bridge financial company would be likely in a G-SIB resolution,

requiring the FDIC to constitute a board and executives to manage it. To do this, he explained,

the FDIC maintains an executive search program to identify qualified candidates for these 

positions. He also noted the FDIC conducted a simulation where it completed all of the 

organizational documents needed to set up a bridge financial company. Mr. Tetrick then outlined 

potential bridge financial company activities that the FDIC and the bridge financial company

board and CEO would oversee. 

Next, Mr. Delfin noted that while the FDIC has been focusing on G-SIB resolution, the FDIC 

has also been working on issues related to non-bank resolution. Mr. Delfin then turned the 

presentation over to Alexandra Barrage, Associate Director, Resolution Strategy & Policy 

Analysis, CISR to discuss resolution planning for broker-dealers.

Ms. Barrage began by noting that the FDIC does not have direct supervisory authority over 

broker-dealers or central counterparties (“CCPs”), nor does it have access to certain data or the 

benefit of a Title I resolution plan for these entities. This, she commented, presents many 

challenges to resolution planning in this area. To work around these challenges, she explained 

that the FDIC works with other regulators, monitors market data, and considers how different 

valuation and resolution strategies can be applied to such firms.

Ms. Barrage then discussed the new broker-dealer rule the FDIC published in June 2019 with the 

Securities and Exchange Commission which contains clarifying provisions relating to brokerdealer resolution in the event the SPoE strategy is not utilized. She explained that the rule

provides for the mechanics of resolution, including payments to customers of the failed firm.

Mr. Delfin next introduced Jenny Traille, Chief, Policy Analysis, CISR to discuss resolution 

planning for CCPs. Ms. Traille began by explaining that if a systemically important CCP was 

resolved under Title II of the Dodd-Frank Act, the FDIC would be the resolution authority, but

noted that CCPs are resilient and resolution should be unlikely. She provided the goal of a CCP 

Title II resolution would be to avoid or mitigate the serious adverse effects on U.S. financial 

stability and maintain the provision of critical clearing functions. She discussed some challenges 

to CCP resolution, including: that the FDIC is not a backup supervisor for CCPs; CCPs do not 

submit resolution plans; a CCP may likely fail with little lead time; and CCPs generally do not 

operate with loss absorbing funds that could be used to recapitalize critical operations. Ms. 

Traille explained CCP resolution planning is less developed than G-SIB planning, but the FDIC 

aims to create strategies to increase optionality and capability to deal with the obstacles to CCP 

resolution. The Committee then held a general discussion regarding issues related to the 

presentation.

Committee Member Comments and Concluding Remarks

Mr. Delfin encouraged Committee Members to participate freely in the program with questions 

and comments, and various Members did so throughout the presentations. In concluding the 

meeting, Mr. Delfin thanked the Committee members for these questions and comments. Mr. 

Delfin then highlighted eight sets of these comments and questions:
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1. Dr. Bernanke asked whether the FDIC takes into consideration a firm’s stress testing in 

its determination of resolution readiness. He expressed a concern that various resolution 

approaches may work when there is a single firm in stress but it is unclear how the 

approaches will work when there are multiple firms in stress.

2. Chairman Bair noted that many of the U.S. G-SIBs have benefitted from interventions 

made by the FRB in response to the COVID-19 pandemic, while regional banks that 

engage in less diversified activities are facing greater challenges and inquired about the 

FDIC’s preparedness in regards to regional bank resolution. Chairman Bair also inquired 

into how long the FDIC expects a bridge financial company to be in place during a Title 

II resolution. 

3. Member O’Connor noted the Committee’s focus on resolvability under Title I and Title II 

but suggested that resiliency deserves consideration. She asked whether there has been a 

shift in resolution planning from focusing on a specific event that could push a firm into 

bankruptcy to understanding what level of resources are required for the firm to avoid 

failure, and how this connects to the resources required in resolution. 

4. Director Gruenberg mentioned that under the broad powers of Title II both bank holding 

companies and non-banks would have to be resolved by the FDIC if failure would have a 

systemic impact on the US financial system. He said this shows that resolution risks are 

not limited to the banking system and that the FDIC will have to think about risks in an 

interconnected way. 

5. In regard to market responses to the COVID-19 pandemic, Member Fisher questioned 

whether any conclusions can be drawn from recent events in regard to firm liquidity 

management and market resiliency given the actions by the FRB to provide liquidity to 

the market. 

6. Member Herring asked how the required liquidity ratios and the resolution triggers 

interact and if there is any reason to believe firms are holding more liquidity due to the 

resolution triggers. He suggested that firms are unsure whether the triggers are a buffer or 

a minimum. 

7. In regard to resolution planning and bankruptcy, Judge Drain, Judge Chapman and 

Member Cohen each discussed the relationship between bankruptcy planning in the U.S.

and in foreign jurisdictions, the role of foreign regulators in bankruptcy, and the need for 

foreign regulators to understand how the U.S. Bankruptcy Code works. 

8. On the topic of governance in the event the FDIC charters a bridge financial company to 

help resolve an institution, Member Cohn commented on CISR’s proposed relationship 

between the FDIC as single shareholder and the bridge’s board and management as to 

control over the bridge financial company and discussed the challenges of bridge 

financial company governance. 
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Mr. Delfin said that he considers these to be a to-do list of sorts, for the FDIC to consider and 

address. 

Chairman McWilliams then concluded the meeting with an expression of thanks to the panelists 

and Committee members for their valuable contributions to the FDIC. 

*****

There being no further business, the meeting was adjourned at 12:06 p.m.

_________________________________

Debra A. Decker

Deputy Executive Secretary

Federal Deposit Insurance Corporation 

and Committee Management Officer

FDIC Systemic Resolution Advisory 

Committee
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October 1, 2020

Minutes

of the

Meeting of the Systemic Resolution Advisory Committee

of the

Federal Deposit Insurance Corporation

Held in the Board Room

Federal Deposit Insurance Corporation Building

Washington, D.C.

Open to Public Observation

October 1, 2020 – 9:00 A.M.

I hereby certify that, to the best of my knowledge, the attached minutes are accurate and 

complete.

________________________________

Jelena McWilliams

Chairman

Board of Directors

Federal Deposit Insurance Corporation