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 In Person and Via Webcast 

December 5, 2023 – 9:00 A.M. 

The meeting of the FDIC Systemic Resolution Advisory 

Committee (Committee) was called to order by Martin J. 

Gruenberg, Chairman of the Board of Directors, Federal Deposit 

Insurance Corporation (FDIC or Corporation). 

Committee Members present in person at the meeting: 

Sheila Bair, Former Chairman, FDIC; Dr. Ben S. Bernanke, 

Distinguished Fellow in Residence, Economic Studies Program, 

Brookings Institution and Former Chairman of the Board of 

Governors of the Federal Reserve System; Hon. Shelley C. 

Chapman, Senior Counsel, Willkie Farr & Gallagher and Former 

U.S. Bankruptcy Judge, Southern District of New York; H. Rodgin 

Cohen, Senior Chairman, Sullivan & Cromwell LLP; Gary Cohn, 

Former Assistant to the President, Economic Policy and Director 

of the National Economic Council; Sir Jon Cunliffe, Former 

Deputy Governor of Financial Stability for the Bank of England, 

Former United Kingdom Permanent Representative to the European 

Union, and Former International Economic Advisor to the Prime 

Minister; Hon. Robert D. Drain, Of Counsel, Skadden, Arps, 

Slate, Meagher & Flom and Former U.S. Bankruptcy Judge, Southern 

District of New York; Dr. Richard J. Herring, Co-Director, The 

Wharton Financial Institutions Center and Professor of Finance, 

The Wharton School, University of Pennsylvania; Dr. Elke Koenig, 

Former Chair of the Single Resolution Board (SRB) and Former 

President of the German Federal Financial Supervisory Authority 

(BaFin); Dr. Donald Kohn, Former Vice Chairman, Board of 

Governors of the Federal Reserve System and Senior Fellow, 

Economic Studies Program, Brookings Institution; Frank LaSalla, 

President, Chief Executive Officer (CEO) and Director, 

Depository Trust & Clearing Corporation (DTCC), and President 

and Chief Executive Officer of DTCC’s principal subsidiaries 

Depository Trust Company (DTC), Fixed Income Clearing 

Corporation (FICC) and National Securities Clearing Corporation 

(NSCC); Timothy J. Mayopoulos, Former President of Blend and 

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Former President and CEO of Fannie Mae and Former General 

Counsel of Bank of America; Sandie O’Connor, Former Chief 

Regulatory Affairs Officer, JPMorgan Chase & Co.; Douglas L. 

Peterson, President and CEO, S&P Global; John S. Reed, Former 

Chairman and CEO of Citigroup, Former Chairman, New York Stock 

Exchange, and Former Chairman, Corporation of Massachusetts 

Institute of Technology; and, Margaret E. (Meg) Tahyar, Partner 

and Co-Head of Financial Institutions, Davis Polk LLP. 

Committee Members attending by video conference: Jay 

Clayton, Former Chairman, U.S. Securities and Exchange 

Commission (SEC). 

Committee Members absent from meeting: Tim P. Clark, 

Distinguished Senior Banking Advisor, Better Markets and Former 

Deputy Director of Supervision and Regulation, Federal Reserve 

Board of Governors and D. Wilson Ervin, Former Vice Chairman, 

Credit Suisse. 

Members of the Corporation’s Board of Directors present at 

the meeting: Martin J. Gruenberg, Chairman; Travis J. Hill, Vice 

Chairman; Rohit Chopra, Director (Director, Consumer Financial 

Protection Bureau); and Michael J. Hsu, Director (Acting 

Comptroller of the Currency). 

Corporation staff in attendance at the meeting: Kent R. 

Bergey, Felita N. Boldin, Jereon M. Brown, Sylvia W. Burns, 

Kymberly K. Copa, Laura C. Crawford, Timothy J. Davin, Angela 

Dean, Debra A. Decker, Keith L. Edens, Elizabeth (Betsy) 

Falloon, Andrew J. (Andy) Felton, Sheila R. Finlayson, Gregory 

Gelzinis, David Gonzalez, Patricia S. Gurneau, Mark L. Handzlik, 

Sean M. Healey, Bruce W. Hickey, Krista Hughes, Monique A. 

Hunter, Veronique R. James, Lia Johnson, Dena S. Kessler, Shawn 

Khani, David E. (Dave) Kiddney, Rosilyn L. King, Cassandra T. 

Knighton, Camille A. Little, Alexandria T. Luk, Nicole L. 

McFarland, Rae-Ann Miller, Patrick M. Mitchell, Dr. Arthur J. 

(Art) Murton, Jhon E. Ochoa Espitia, Dr. Jon Pogach, Laura D. 

Porfiris, Ariana L. Rambuyan, Kami Schexnayder, Alfred L. 

Seivold, Nirali R. Shah, James P. Sheesley, Richard P. (Pen) 

Starke, Nathan C. Steinwald, Brian E. Sullivan, Maureen E. 

Sweeney, Ryan P. Tetrick, Mona L. Thomas, Amy C. Thompson, Jenny 

G. Traille and Aaron W. Wishart. 

Other guests in attendance: Dr. Eva Hüpkes, Secretary 

General, International Association of Deposit Insurers (IADI); 

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Sebastiano Laviola, Board Member, SRB; and J. Michael Shepherd, 

Former Chairman and CEO of Banc West Corporation. 

Welcome and Introduction 

Chairman Gruenberg presided at the meeting. He offered 

welcoming remarks, including an overview of the meeting’s topics. 

The Chairman introduced and welcomed the two newest members of the 

Committee. The Chairman also thanked and welcomed back the 

returning members of the Committee, and recognized FDIC Board 

Members, Vice Chairman Hill, Director Chopra, and Acting 

Comptroller Hsu, who were also in attendance. 

Vice Chairman Hill, Director Hsu, and Director Chopra made 

welcoming remarks. The Chairman then recognized Art Murton, 

Deputy to the Chairman for Financial Stability and Director of 

the FDIC’s Division of Complex Institution Supervision and 

Resolution (CISR), and Jenny Traille, Senior Deputy Director of 

CISR, to lead the staff presentation. 

After Mr. Murton gave introductory remarks, Ms. Traille 

reviewed the agenda and made a statement regarding the FDIC’s 

obligations under the Government in the Sunshine Act (Sunshine 

Act) and the Administrative Procedure Act (APA). Regarding the 

Sunshine Act, she confirmed that this was not a meeting to conduct 

business of the FDIC Board of Directors and that the Board members 

present would only engage in general or preliminary discussions 

that do not relate to specific proposals for action pending before 

the FDIC. Regarding the APA, she made an announcement about 

several recently-issued notices of proposed rulemakings (NPRs), 

that are currently pending, regarding various topics that are 

expected to arise during the meeting. These NPRs include a proposal 

to require certain financial institutions to maintain certain 

amounts of long-term debt; proposed revisions to the capital rules 

for certain banking organizations; proposed corporate governance 

and risk management guidelines that would apply to certain FDICsupervised depository institutions; and proposed revisions to the 

FDIC's Resolution Planning Rule for insured depository 

institutions (IDIs). She also mentioned proposed guidance to 

Category II and III covered companies regarding their Title I 

resolution plans. 

She noted that the FDIC is in the process of collecting and 

reviewing comments associated with these proposals, and will 

consider all comments before the Board finalizes any of these 

proposals. She said staff would give presentations during the 

meeting on some of the proposals based on publicly available 

information. The staff is not able to indicate the direction the 

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FDIC or any of the other agencies involved in these proposals are 

likely to take with respect to these matters. She advised that 

staff will publish a high-level summary of the meeting’s 

discussions on the FDIC website following the meeting. 

Session 1A: Spring Bank Failures 

Ms. Traille introduced staff members for the first session: 

Alfred Seivold, Deputy Director, CISR; Ryan Tetrick, Deputy 

Director, CISR; Dave Kiddney, Associate Director, CISR; and Pen 

Starke, Acting Deputy General Counsel, Legal Division. 

Mr. Seivold stated he would discuss bank failures that 

occurred in the spring of 2023, detailing some root causes, the 

timeline of events, and lessons learned; highlighting regulatory 

developments; and providing insights into how the FDIC is 

proceeding. Mr. Seivold discussed how the use of social media 

evolved during the COVID period as a tool for market participants 

to communicate, and how the instantaneous spread of information 

via social media, as observed in March 2023, may have fundamentally 

changed how bankers and regulators must prepare for future bank 

runs. 

In addition, in 2022, the federal funds rate increased from 

near zero to more than 4.25 percent, which was the steepest 

increase in more than a generation. The dramatic change in rates 

put pressure on firms' balance sheets, especially for those that 

invested in longer-term assets. The March failures highlighted 

important questions about how banks manage their interest rate 

risk, and also raise questions about appropriate treatment of 

unrealized losses for capital purposes. 

The three regional banks that failed in spring 2023 shared 

some common characteristics that made them more vulnerable to a 

run, as discussed in reports previously issued by the Federal 

Reserve Board (Federal Reserve) and FDIC. First, the three banks 

grew rapidly and relied heavily on uninsured deposits for funding. 

Two had uninsured deposits approximating 90 percent of their 

funding; the third, roughly 70 percent. 

Additionally, Silicon Valley Bank (SVB) and First Republic 

Bank (First Republic) had elevated levels of unrealized losses on 

securities and low yield loan portfolios relative to their capital 

base that caused customers and market participants to question 

their solvency. Lastly, SVB and Signature Bank demonstrated 

management failings and were not responsive to supervisory 

feedback. 

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Mr. Tetrick described circumstances that prevailed prior to 

SVB’s failure, and compared the scale of withdrawals from SVB, 

which amounted to $42 billion in just six hours, to prior bank 

runs, such as withdrawals from Washington Mutual before it failed 

in 2008. As it became apparent SVB would fail, the FDIC worked 

with the Federal Reserve and the California Department of Financial 

Protection and Innovation to prepare for a resolution. 

Mr. Tetrick described the consideration of strategies for 

the resolution. SVB had a high percentage of uninsured deposits, 

a high level of unrealized losses in its securities portfolio, and 

a relatively small amount of unsecured debt to absorb losses, all 

of which would lead to a high level of loss for uninsured 

depositors. This would mean there was no way to protect uninsured 

depositors that would comport with the Least Cost Test and that 

this would have resulted in one of the largest absolute losses for 

uninsured depositors in U.S. history. 

The FDIC decided to form a deposit insurance national bank 

(DINB) to allow depositors to more easily withdraw their insured 

deposits. The FDIC also decided to announce an advance dividend, 

based on a conservative estimate of eventual recoveries from the 

bank’s assets, to ease the impact on uninsured depositors. SVB 

was then placed into receivership on Friday morning, March 10, 

2023. As the FDIC began resolving SVB, including preparing a 

marketing process for the failed bank, it learned of the severity 

of the deposit run at Signature Bank. Over that weekend, deposit 

outflow requests continued at Signature Bank, SVB, and First 

Republic, which was also on the brink of failure. 

Over the weekend, the FDIC began a formal bidding process 

for SVB, which differed from prior such processes, such as for 

Washington Mutual, by being compressed into a weekend instead of 

over several months. Some potential bidders chose not to bid, and 

other bids were lower than the estimated cost of liquidating the 

bank’s assets and paying out insured depositors. The FDIC 

simultaneously began preparing to activate bridge banks for 

Signature Bank, SVB, and First Republic. First Republic secured 

borrowing that allowed it to remain open the following week. 

On Sunday, March 12, 2023, authorities took steps to 

address the contagion that was spreading broadly through the 

banking system. The Bank Term Funding Program was launched by 

the Federal Reserve on March 12, and allowed banks to borrow 

against securities collateral for up to one year. In addition, a 

systemic risk exception was recommended unanimously by the 

boards of the FDIC and Federal Reserve, respectively, and then 

5 
invoked by the Secretary of the Treasury, after consultation 

with the President. Factors supporting this decision included 

the impact on uninsured depositors, including companies that had 

large uninsured deposits at these banks and were concerned about 

making payroll in the coming week, and particularly the 

potential for deposit outflows to continue at other banks and 

increase the series of bank failures. The systemic risk 

exception allowed authorities to protect all depositors of the 

failed banks, transfer deposits to bridge banks, and provide 

assurance to the financial system. 

Regarding lessons learned from the experience, Mr. Tetrick 

highlighted the ability to respond to atypical events, and to 

adjust responses as needed. 

Member Kohn commented on the subject of banks using the 

Federal Reserve’s discount window as part of their liquidity 

planning, and referred to potential perceptions of stigma for 

such banks. He asked what regulators and supervisors are doing 

to get banks better prepared to use the discount window, and 

whether supervisors are more open to using the window as part of 

liquidity planning and liquidity stress tests. 

Mr. Seivold advised that subject was a focus of supervisors 

over the summer and fall, and Director Hsu discussed the 

challenge of having banks ready to use the window, but not overreliant on it. Chairman Gruenberg agreed, and stated the 

banking agencies are focused on liquidity issues, including 

managing access to the discount window and the issue of 

prepositioning collateral at the discount window. 

Member Herring asked whether consideration was given to not 

using the systemic risk exception, and instead only giving 

uninsured depositors an advance dividend. Chairman Gruenberg 

stated that was considered, and noted that when SVB failed on 

Friday morning, March 10, the FDIC announced (i) the creation of 

a DINB from which insured depositors could withdraw their 

deposits on Monday, March 13, and (ii) that uninsured depositors 

would be eligible for an advance dividend. He noted that 

authorities’ views changed on Friday evening, March 10, when it 

became clear that contagion was occurring and deposit runs at 

Signature Bank and First Republic were resulting. He said 

serious consideration was given to the approach Member Herring 

asked about, but that the contagion effect and the concern of a 

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broadening of the problems to other institutions led to the 

decision to invoke the systemic risk exception. 

Director Chopra mentioned that other events occurring at 

the same time as SVB’s failure, including the liquidation of 

Silvergate, following a few months after the failure of FTX and 

other institutions, led to additional concerns about the 

problems spreading to other institutions that were involved in 

more traditional banking lines than SVB. He noted that a lot of 

thought had been given to avoiding the systemic risk exception. 

Member Bernanke asked if any of the banks had Federal Home 

Loan Bank (FHLB) advances and, if so, how that would have 

affected the resolution strategy. Mr. Tetrick said the banks 

had FHLB advances, some of which were transferred to the bridge 

banks. 

Member Cunliffe asked about supervisory treatment of SVB 

and the other banks prior to their failures. Mr. Seivold noted 

that the post-failure reports had stated that authorities should 

have been more forceful in taking supervisory actions, because 

bank management was not addressing problems quickly enough, 

including SVB’s interest rate risk. Mr. Tetrick noted that 

authorities were concerned about these particular banks, but 

that the banks’ deterioration had not progressed to a level that 

authorities had mobilized for resolution in advance. 

Member Koenig asked about the potential that, prior to the 

failures, more stringent liquidity requirements could have been 

implemented. Mr. Seivold noted a potential lack of 

anticipation, at the time, of the speed with which deposits 

would leave the bank, and said the supervisory toolkit provided 

authorities with the tools to have done more. 

Member Cohen noted the operational risk issues regarding 

access to the Federal Reserve’s discount window, and collateral 

issues when dealing with FHLB advances. He stated he hoped the 

system would overcome any stigma applied to primary credit, but 

thought such stigma would not be overcome regarding secondary 

credit, and that the Federal Reserve would have to be willing to 

exercise discretion, when appropriate, to not classify borrowing 

as secondary. He also stated authorities should not secondguess the decision to invoke the systemic risk exception, 

because in his opinion if it was not invoked, multiple banks 

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would have failed, and potentially additional problems would 

have occurred. 

Member Cohn agreed with Member Cohen’s comments. He stated 

that authorities and the banking industry might have different 

views of uninsured and insured deposits, and that for large 

corporations it was essential that they have the ability to 

safely deposit large sums for their payroll payments; for this 

reason he also thought the systemic risk exception decision 

should not be second-guessed. He also highlighted the 

detrimental impact on SVB of customers suggesting that other 

customers withdraw their funds. 

Member Peterson noted that in some ways SVB was more like a 

securities company than a bank. He asked about coordination 

among authorities regarding SVB, and whether certain banks 

should cease being treated as banks if they were more similar to 

a securities company. Mr. Tetrick answered that coordination 

did occur among the FDIC, the Federal Reserve, and the 

California Department of Financial Protection and Innovation, 

and that SVB had some aspects typical to a bank, as well as 

other aspects that were atypical, such as extensive loans to 

start-up corporations. 

Member LaSalla stated that the systemic risk exception was 

probably the right decision, but he asked whether SVB and the 

other failures represented an instance of a run on a particular 

business model, and whether, in the future, institutions with 

similar business models should be treated as part of a 

particular category. He also asked if there were elements of 

the regulatory structure that impacted the oversight of SVB. 

Mr. Tetrick said the failed banks had similarities, but also 

some differences. He also opined that there was not a 

particular impediment in the regulatory structure. He said the 

FDIC was quite active in engaging with the Federal Reserve, the 

Office of the Comptroller of the Currency (OCC), and State 

regulators in New York and California. Mr. Seivold echoed those 

comments. 

Director Hsu commented that, regarding the idea of a run on 

a particular business model, there is a risk of 

oversimplification. He said there were various ways to think of 

contagion; one is the risk of loss, and one is the idea of guilt 

by association. He discussed various aspects of these 

perceptions, both now and going back to the financial crisis of 

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2008. Director Chopra discussed the topic of regulatory 

cooperation, as well as the FDIC’s self-appointment authority. 

Member Peterson opined that Global Systemically Important 

Banks (G-SIBs) benefited from the outflow of deposits in spring 

2023. Chairman Gruenberg said the FDIC had tracked that issue 

in its quarterly banking profiles, and that the flow of deposits 

to the G-SIBs was limited and then actually reversed; the 

principal recipients of flows were instead money market funds. 

Member Cohn remarked that it was perhaps not correct to say 

SVB and the other failed banks were “dependent” on uninsured 

deposits; rather, their high levels of uninsured deposits meant 

they did not know what to do with those funds. He said that in 

similar circumstances he would have bought zero-risk rated 

assets, of short duration, but he would have hedged the interest 

rate risk. 

Member Cunliffe acknowledged that uninsured deposits might 

“run” from a bank faster, and also discussed the sharp rise in 

interest rates over the prior year. He discussed prior 

experiences in the U.K. that similarly showed the potential for 

a social media message to cause a fast bank run. He noted that 

an event that is idiosyncratic in one situation can be 

contagious in another. Chairman Gruenberg noted that insured 

deposits increased rather than declined during the 2023 events. 

Ms. Traille noted that, if there were no other pending 

comments, the agenda would proceed to discuss stabilizing the 

bridge banks. 

Session 1B: Stabilizing the Bridge Banks 

Mr. Kiddney discussed operating and stabilizing the bridge 

banks. Mr. Kiddney discussed how staff worked in March 2023 to 

resolve SVB, and to prepare to possibly resolve other banks, in 

a short period of time, including such actions as chartering the 

bridge bank for SVB, preparing to open additional bridge banks 

in the subsequent week, and identifying leadership for the 

bridge banks. Based on prior work to identify potential 

leadership for future bridge banks, the FDIC contacted three 

potential executives from this “standby pool” (Greg Carmichael, 

Member Mayopoulos, and Michael Shepherd) about the possibility 

of serving as CEOs of the three potential bridge banks, 

respectively. Mr. Kiddney noted Mr. Carmichael could not attend 

today’s meeting because of a scheduling conflict. 

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Member Mayopoulos expressed his gratitude to the FDIC for 

being given the chance to be the CEO of the Silicon Valley 

Bridge Bank (SVBB). He discussed his experience as CEO of 

SVBB,and opined that the bridge bank had facilitated an orderly 

sale process that mitigated the negative effect of SVB’s failure 

on uninsured depositors and on the FDIC’s Deposit Insurance Fund 

(DIF). He expressed his support for the authorities’ treatment 

of the uninsured deposits at SVB, and noted the negative impact 

that might otherwise have occurred, especially for corporations 

that needed their deposits to fund payrolls. 

He praised the FDIC for giving the CEOs of the bridge banks 

discretion to make many decisions, including in communicating 

with employees of the failed banks. He also complimented the 

FDIC’s decisions to engage a knowledgeable communications firm 

to help SVBB, and to retain at SVBB much of the failed bank’s 

executive leadership, other than the CEO and Chief Financial 

Officer. He particularly praised the dedication of the failed 

bank’s employees, and of the FDIC staff that assisted SVBB. He 

thought the bridge bank was a success, especially as it met most 

customer needs and was able to operate for several weeks, 

allowing the FDIC to execute a more successful resolution. 

Regarding aspects that could have gone better, Member 

Mayopoulos mentioned that some counterparties failed to 

recognize SVBB as “standing in the shoes” of SVB, which 

increased obstacles for SVBB. In particular, some payroll 

processors initially declined to work with SVBB to process 

payroll transactions, and SVBB’s ability to execute foreign 

exchange transactions was hampered. 

Another difficulty for SVBB was the need to initiate new 

indemnification agreements and Director and Officer (D&O) 

insurance for executives. A challenge was that there was no 

compensation plan in place for most senior executives at SVBB. 

He encouraged the FDIC to develop public guidance that 

could be used in future cases to reassure domestic and foreign 

counterparties of failed banks that the bridge bank “stood in 

the shoes” of its predecessor for contractual purposes, and he 

suggested consideration be given to the idea of insuring very 

large deposits, for an appropriate fee, such as in the case of 

corporations needing to hold large deposits at banks prior to 

issuing payroll to their employees. 

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Mr. Kiddney noted that the employees of SVB did receive 

retention plans when working for SVBB, but the executives did 

not. Regarding communications to counterparties considering 

transacting with the bridge bank, he stated that a Financial 

Institution Letter (FIL) issued by the FDIC the Tuesday after 

SVB’s failure helped to provide more clarity on that topic. 

He said the FDIC was incorporating lessons from SVB’s 

failure into operations in real time in March 2023, as the FDIC 

was planning to resolve First Republic. The FDIC had 

communicated with Michael Shepherd in March 2023 and asked him 

to serve as CEO of a bridge bank for First Republic. 

Mr. Shepherd, former Chairman and CEO of Bank of the West, 

addressed the meeting participants. He praised the idea of a 

standby pool of potential executives for failed banks. He was 

asked on March 12, 2023, to be CEO of the bridge bank for First 

Republic , but the bank received an influx of funds shortly 

afterwards, and did not fail at that time. He described being 

prepared, for a period of about six weeks, to serve as a bridge 

bank CEO if needed, although ultimately that did not become 

necessary. He explained the process of educating the standby 

pool members about the bank, its internal and external 

communications, and its assurances to counterparties. He 

praised the idea of having informational packets about a failed 

bank that could be provided to the standby pool members who 

might assist with that bank. 

Member Tahyar, who was the outside counsel for both bridge 

banks, spoke about suggestions she might make, with the benefit 

of hindsight, to improve the process. First, the FIL that was 

released the Tuesday after SVB’s failure would have been more 

helpful, especially in dealing with other banks, if it had been 

released two days earlier: on Sunday, after the bank’s failure 

the preceding Friday. The CEOs of the other banks were willing 

to keep dealing with the bridge banks; the problem was that 

subordinates within the other banks, such as employees in the 

wire room, were reluctant to send funds to the bridge banks 

because of fears the funds might be lost. She also noted that 

the time spent on indemnifications and D&O insurance for 

executives was a distraction, and that those arrangements 

potentially could have been worked out in advance. Finally, she 

suggested the FDIC’s documentation for bridge banks and its 

resolution handbook be updated. 

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Mr. Laviola asked a question regarding solvency and 

liquidity requirements for bridge banks, and whether timing 

requirements are waived for bridge banks. He said the European 

Banking Union is currently considering similar issues. 

Mr. Starke replied that there are no capital requirements 

for bridge banks. The bridge bank is backed by the FDIC and its 

DIF, and its obligations are backed by the full faith and credit 

of the United States. He added that the DIF had been able to 

provide liquidity. 

Member LaSalla asked if this would be the case even if the 

sale of the bridge bank were to occur up to five months or a 

year later, rather than in two weeks. Mr. Starke confirmed that 

this was correct. 

Member Cohen commented that he wondered whether there could 

be an appendix to banks’ resolution plans that listed 

information that would be pertinent to an interim CEO of a 

bridge bank. Member Mayopoulos agreed that would be useful, and 

perhaps could have informed him about the legal entities in the 

bank structure, the organizational chart, size of the assets, 

etc. 

Mr. Tetrick said that on the initial weekend after SVB’s 

failure, there was not time to prepare such materials before 

contacting the potential CEO for SVBB. For First Republic, on 

the other hand, there was time to get much of that information 

for Mr. Shepherd. He also added that the FDIC had internally 

updated much of the documentation for bridge banks, but had not 

yet finalized them with the OCC. In the case of SVB’s failure, 

the FDIC had zero days to prepare, whereas in other cases, the 

FDIC generally has had several weeks at least. 

Chairman Gruenberg thanked Member Mayopoulos and Mr. 

Shepherd for their presentations, and for their willingness to 

assist when the regional banks failed. 

At the conclusion of this discussion, the meeting stood in 

recess from 11:01 a.m. to 11:18 a.m. 

Session 2: International Perspectives and Lessons Learned On GSIBs and Regional Banks 

Ms. Traille introduced the two presenters for the next 

session. The first presenter was Dr. Eva Hüpkes, the Secretary 

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General of IADI. She was previously the head of Regulatory and 

Supervisory Policies at the Financial Stability Board (FSB), and 

prior to that was the head of policy and regulation at the Swiss 

Financial Market Supervisory Authority (FINMA), and FINMA’s 

predecessor organization, the Swiss Federal Banking Commission. 

She was also recently a member of the Swiss Expert Group on 

Banking Stability (Swiss Expert Group) commissioned by the 

Federal Department of Finance of Switzerland to focus on 

financial market and stability issues. 

The second presenter was Mr. Sebastiano Laviola. Mr. 

Laviola is a member of the SRB in Europe and the SRB’s Director 

of Resolution Strategy and Cooperation. Prior to that, he was a 

Central Director of the Bank of Italy, Italy’s central bank. He 

currently chairs the FSB’s Cross Border Crisis Management Group 

for banks (BankCBCM), which is part of the FSB’s Resolution 

Steering Group (ReSG). The FSB recently published a report on 

the 2023 bank failures, including lessons learned for 

resolution. 

For this session, FDIC panelists were Mr. Murton, Mr. 

Tetrick, Susan Baker, Corporate Expert, CISR, and Bruce Hickey, 

Senior Counsel, Legal Division. 

Dr. Hüpkes stated that she participated in both the FSB 

review and the Swiss Expert Group established by the Federal 

Department of Finance of Switzerland, which included bankers, 

academics, and former FINMA and FSB officials. She began by 

summarizing some of the facts of Credit Suisse’s difficulties, 

which involved a gradual deterioration over several years. 

Specifically she noted an erosion of confidence and a 

combination of issues including weakness in its business model 

and its governance, reflecting a lack of effective controls. 

Credit Suisse had also not been responsive to supervisory 

action. In addition, it experienced many changes in its risk 

and compliance leadership, and a fast turnover of senior 

management in recent years. It had three different Chairmen 

over three years, and four CEOs over seven years. 

The bank’s announcement of a revised strategy that included 

raising four billion Swiss francs in 2022 to fund a 

restructuring did not restore market confidence. Credit Suisse 

did not have the strength and ability to manage a turnaround, 

despite the reported solid group capital liquidity figures. Dr. 

13 
 

 

Hüpkes reported that the market started to question the bank’s 

financial strength and viability in late 2020 and substantially 

lost confidence in the early fall of 2022, as reflected in 

significant outflows in the fourth quarter. 

On 15 March 2023, FINMA confirmed that Credit Suisse still 

met capital and liquidity requirements, and the Swiss National 

Bank (SNB) was ready to provide emergency liquidity assistance 

to Credit Suisse. Credit Suisse then announced it was drawing 

50 billion Swiss francs, which seemed modest in size and did not 

reassure the markets. 

On March 19, after intervention by Swiss authorities, UBS 

and Credit Suisse reached a merger agreement. It was fully 

completed in June and FINMA approved the takeover, based on a 

provision in the Swiss Federal Constitution that grants power to 

the government to act and provide credit to safeguard the public 

interest. 

The government emergency regulation also contained 

arrangements for the SNB to provide liquidity assistance and a 

default guarantee covering 100 billion Swiss francs. Those 

arrangements were terminated in August 2023. The emergency 

regulation also enabled the government to enter into a loss 

protection agreement with UBS. The state would have incurred a 

loss of up to several billion francs, if any definitive loss 

arose from the sale of certain assets after UBS took over Credit 

Suisse. The loss protection agreement was also terminated in 

August 2023. 

The emergency regulation enabled the SNB to provide 

additional emergency liquidity, the so-called “ELA plus”. The 

priority was up to 100 billion in the creditor hierarchy, but it 

was otherwise un-collateralized. The emergency regulation also 

allowed for the merger to go ahead with approval of UBS, and 

without the approval of UBS and Credit Suisse shareholders and 

without other requirements, such as the preparation of interim 

balance sheets. The emergency regulation also authorized FINMA 

to order Credit Suisse to write down AT1 bonds. 

The Swiss authorities chose not to execute the resolution 

plan that had been developed jointly with the members of Credit 

Suisse’s crisis management group (CMG), which included the FDIC. 

That resolution strategy, which was a single point of entry 

(SPOE) open-bank resolution strategy, would have entailed the 

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full write-down of capital, the full write-down of AT1 bonds, 

and the conversion of bail-in bonds issued by the holding 

company, which would have generated 57 billion in fresh capital. 

That strategy was deemed executable by FINMA, a conclusion 

shared by the Swiss Expert Group and also the members of the 

CMG. Dr. Hüpkes noted that it would not have been without risk. 

Bondholders could have claimed a lack of proportionality, given 

the intact capital base, or the way it was communicated. The 

execution of bail-in could have given rise to operational and 

legal challenges in light of the application of securities laws 

in the U.S. and other jurisdictions. 

It seems that those factors were not the ones that were 

really decisive. The Swiss public reacted negatively to the 

merger, perhaps because it increased the dominance of UBS in the 

Swiss market; they would have preferred the creation of a 

standalone and much smaller bank. However, the Swiss 

authorities stressed that this was the best solution under the 

circumstances. The alternative might have been nationalization 

or a further delay in coming to a decision. 

Dr. Hüpkes commented that the resolution option might not 

have been well communicated in advance. It sounded more like a 

bankruptcy that could have severe systemic consequences. 

However, the Swiss Expert Group’s conversations with market 

participants resulted in the view that there would not have been 

major systemic consequences. 

A number of lessons may be drawn from this experience, both 

as to supervision and as to resolution. Dr. Hüpkes first 

offered three points on supervision. 

First, capital and liquidity metrics were not transparent, 

as they did not provide a good view of the health of the bank 

and actually-available resources. Some capital and liquidity 

resources were trapped in particular entities, whether in host 

jurisdictions or in the bank’s subsidiary in Switzerland. These 

were not freely usable and could not be moved where they were 

actually needed. 

Second, the Swiss Banking Act provides a legal basis for 

early intervention that is fairly broad and provides wide 

discretion. The Swiss Expert Group’s review wondered whether 

the discretion was too broad and therefore resulted in FINMA not 

acting early enough, out of fear of legal challenges. From a 

15 
 

 

 

Swiss perspective, it could be helpful to have specific 

quantitative but also qualitative criteria, similar to prompt 

corrective action triggers. For example, these might have 

considered other factors such as profitability, market value, or 

a business model, to enable the supervisor to intervene early 

and mitigate forbearance. 

Third, recommendations have been made to strengthen FINMA’s 

enforcement powers and strengthen individual accountability at 

senior management levels through a regime similar to that in the 

U.K. 

Dr. Hüpkes also made three points regarding resolution. 

The first related to flexibility and optionality in resolution. 

FINMA had only prepared for a single resolution strategy: an 

SPOE bail-in strategy. The Swiss banking law gives FINMA a 

range of resolution powers, including the power to set up a 

bridge bank. These could have allowed FINMA to implement the 

merger in resolution. However, without preparation, this would 

have been difficult to arrange in a very short period of time. 

It is clearly not possible to prepare for all possible 

scenarios, but advance consideration as to which resolution 

tools could be applied in different scenarios could help 

authorities to be better prepared. 

Dr. Hüpkes opined that the Credit Suisse case also 

demonstrated challenges associated with an open bank bail-in 

strategy in which the debt-to-equity conversion has to be 

essentially executed over one weekend, leaving very little time 

to meet SEC requirements regarding exemptions and disclosures, 

given that the Credit Suisse TLAC bonds were traded in the U.S. 

Dr. Hüpkes noted that consideration had occurred as to 

whether the use of a bridge would have allowed more time. She 

noted the issue of whether the assumption by the bridge bank of 

operations of the failed bank, including in foreign 

jurisdictions, would require approval from host regulators 

regarding change of control. She suggested, however, that 

having a bridge bank might have allowed for more time in 

preparing post-resolution restructuring options, transferring 

operations to other market participants, and finding a buyer. 

Another key finding was that the public liquidity backstop 

is critical for an effective resolution and for its credibility. 

There is now a new legislative proposal in Switzerland, which 

16 
 

 

 

 

 

 

would include a fee that systemically important banks would have 

to pay to compensate the state. 

A key recommendation of the Swiss Expert Group’s review was 

that banks and supervisors need to be able to ensure banks are 

better prepared to access liquidity and prepositioned 

collateral. FINMA has the sole authority to place a bank into 

resolution, and the group found it difficult to see how FINMA, 

on its own, could exercise this power with respect to a G-SIB 

that would need extremely large amounts of liquidity from the 

SNB, and the failure of which could have also had significant 

economic repercussions for the entire country. These factors 

would suggest that the lender of last resort (SNB) and the Swiss 

executive government should have a part in the decision, similar 

to the “three keys” approach in the U.S. under Title II of the 

Dodd-Frank Act (DFA). The Swiss Expert Group recommended the 

Swiss decision-making process be reviewed. 

Dr. Hüpkes concluded by highlighting two points. First, 

she noted that on the weekend Credit Suisse was merged with UBS, 

the Swiss authorities held a press conference on Sunday to 

communicate the assisted merger plan to the public at 7:30 pm 

(Swiss time)(or, in Japan, at 3:30am local time on Monday), 

while the Japanese authorities had been working to potentially 

refinance Credit Suisse. The Japanese authorities only learned 

about the Swiss authorities’ plan shortly before the Swiss press 

conference, which was also shortly before the opening of the 

Japanese markets. She suggested thought might be given to how 

authorities operate during crises, including communications with 

authorities in different time zones. She noted the Swiss had 

been working closely with the CMG members, including the U.K. 

and U.S. authorities. 

She also noted the significant need for resources and staff 

with relevant expertise. FINMA is leanly staffed compared to 

authorities in other jurisdictions, and relying on outside 

auditors does not compensate for this fact. She suggested 

thought needs to be given to how to augment available resources 

quickly in times of stress and also during normal supervision. 

Mr. Laviola stated that he had been tasked with leading an 

FSB group to assess the implications for the international 

resolution framework and to identify initial lessons learned 

from the recent crisis events. He said his comments to the SRAC 

17 
 

 

 

were based on that group’s report, which were approved by the 

ReSG members and then by the entire FSB membership. 

The report’s findings regarding resolution were consistent 

with those reported by Dr. Hüpkes. This was the first major 

test of the international resolution framework after the 

financial crisis of 2008-09, and involved over $1.1 trillion in 

total assets. 

The review upheld the appropriateness and feasibility of 

the resolution framework, while also identifying several 

implications both for G-SIBs and for other systemically 

important banks. The decade-long work on resolution planning 

and capabilities, and the accumulation of loss-absorbing 

capacity (LAC), proved very useful. Credit Suisse’s case 

provided an executable alternative to the solution the 

authorities chose. The preparation in building up operational 

continuity, access to financial infrastructures, and crossborder cooperation and crisis management worked well. After 

Credit Suisse’s liquidity crisis in October 2022, FINMA prepared 

for a potential resolution by coordinating with authorities in 

Switzerland, the U.S., and U.K. When the crisis arose, 

financial stability was preserved, and contagion effects 

prevented, in those jurisdictions. 

He stressed the need to have good communication and 

coordination among authorities, and also with the firm. The 

Credit Suisse case also showed that, in certain circumstances, 

the communication has to go beyond the core CMG, in order to 

deal with indirect effects. He mentioned that it might be worth 

reassessing our consideration of jurisdictions’ host entities 

that may be domestically systemic, even if not internationally 

systemic. In addition, authorities would benefit from increased 

awareness of the potential impact of bail-in on financial 

markets. 

Mr. Laviola noted these topics are addressed in the FSB’s 

Key Attributes of Effective Resolution Regimes for Financial 

Institutions, including in its annexes. In addition, the work 

program of the FSB’s ReSG includes consideration of resolution 

planning to preserve optionality of resolution tools. 

Another aspect shown by the review is the importance of the 

availability of an effective public sector funding backstop, as 

well as the importance of preparation for cross-border 

18 
 

recognition and the execution of a cross-border bail-in. The 

FSB has ongoing work in this regard. In addition, authorities 

have to be able to communicate and execute a credible 

restructuring plan to regain market confidence. 

He highlighted the need to analyze which institutions might 

be systemic in certain circumstances, and also the need for 

sufficient LAC. European legislation contains mandatory longterm debt requirements for the largest banks. There is also 

analysis necessary regarding the interaction of insured and 

uninsured deposits, and deposit insurance levels. 

Overall, the Banking Union banks were not significantly 

affected by the volatility in spring 2023. A review of the 

European crisis management framework is still ongoing, however. 

Key issues under consideration are the resolution of mid-size 

banks, communication and confidence, and liquidity in 

resolution. Mr. Laviola also discussed the interaction of 

national deposit guarantee systems with the Single Resolution 

Fund in Europe. 

Member Herring expressed appreciation for the 

presentations, which helped explain the events in Europe. He 

asked about a comparison between the report and the sentiment, 

expressed by a Swiss official during the crisis, that the 

preferred resolution strategy was not workable, and about how 

Switzerland approaches the “too big to fail” issue. He opined 

that producing a restructuring plan immediately after opening a 

bridge bank seemed a difficult task. He also mentioned that the 

effectiveness of TLAC might be questioned if, during a crisis, 

additional exemptions or prospectuses would have to be arranged. 

Dr. Hüpkes noted that it was unclear the extent to which, 

prior to the crisis, all the Swiss authorities had been briefed 

about the resolution plan. After the events, FINMA has 

confirmed it was ready to proceed with a resolution plan, and 

FINMA was supported at the time by authorities in the U.K. and 

U.S. FINMA also confirmed that the existence of the resolution 

plan assisted authorities in ultimately deciding upon the 

assister merger of Credit Suisse and UBS, which has in fact 

preserved financial stability in Switzerland. 

Mr. Laviola discussed the difficulty of knowing how market 

participants would have reacted to a resolution of Credit 

Suisse, but he noted indications in the reports that investors 

19 
 

 

 

 

were prepared for a resolution. He also reiterated that more 

work needs to be done to increase awareness of authorities and 

market participants regarding impacts of bail-in. 

Member Cunliffe thanked the presenters, and stated that the 

U.K. had been prepared to assist a resolution. He spoke about 

the background of Credit Suisse’s problems, and whether a new 

environment prevailed in which a long-term reduction in trust in 

a bank could, in some circumstances, transform into a liquidity 

problem for that bank. He wondered whether consideration had to 

be made of a bank’s “investability”, i.e., the view investors 

have of the bank, and he also asked about the views of Credit 

Suisse shareholders. 

Mr. Laviola agreed that there had been a long-term concern 

among investors about Credit Suisse’s business model. He added 

that it was worth considering whether there was a new paradigm, 

especially with social media and panic-driven behavior, in which 

profitability and sustainability of the business model had to be 

considered, along with capital and liquidity. 

Member Cohen discussed the issue of bail-in and securities 

laws, and suggested that a no-action letter or an exemption 

could be used to facilitate a bail-in. 

Member Koenig commented that it would be difficult in the 

European Union to enact legislation in the manner that 

Switzerland did during Credit Suisse’s difficulties, and she 

discussed the issue of whether G-SIBs should be merged with each 

other. 

Member Bair commented on whether the approach taken 

regarding Credit Suisse would impact perceptions of the 

possibility of other resolution plans being carried out. Mr. 

Laviola agreed that some of the bank’s problems perhaps should 

have been anticipated, but noted that it is difficult to address 

crises as they occur, especially when they develop quickly. 

Member Bair and Dr. Hüpkes commented on the issue of 

ascertaining whether TLAC will actually be executable, including 

disclosure requirements. 

Member Herring noted that Credit Suisse and the U.S. 

regional banks that failed in 2023 had been sufficiently 

capitalized not long before their difficulties, and he suggested 

the importance of trying to identify a definition of non20 
 

 

 

viability that facilitated an earlier intervention. Mr. Laviola 

agreed that in addition to capital, liquidity, and other 

objective measures, it would be helpful to view factors in a 

holistic method, including the business model. 

Member Kohn asked what members thought the implications of 

the 2023 events might be for G-SIBs. He stressed the importance 

of effective restructuring planning to address the problems, and 

of anticipating the risk of negative market reactions. 

Mr. Tetrick noted that, in the case of Credit Suisse, 

authorities had several months in which to consider a potential 

failure, in contrast to the failures in the U.S., which occurred 

very quickly. Some of Credit Suisse’s core metrics (CET1 ratio, 

liquidity coverage ratio) were relatively healthy, which showed 

banks can fail in a variety of ways. As noted in the two 

reports, authorities were able to prepare in advance for a 

potential resolution, in a process led by the Swiss authorities. 

As noted earlier, the U.K. authorities were prepared to assist a 

resolution, as were the U.S. authorities. He also commented 

that there needed to be an improvement to the firm’s business 

model and risk management, and Swiss authorities were aware of 

that. 

For this reason, in banks’ resolution plans, U.S. 

authorities place importance on the topic of separable 

components and objects of sale, so a variety of options exist in 

a failure. No resolution will be without costs; however, in a 

G-SIB resolution costs will be borne by TLAC holders, and 

authorities need to manage issues so there are not knock-on 

effects. Mr. Tetrick thought the authorities had key pieces in 

place to resolve a G-SIB under Title II of the DFA, and the FDIC 

would be publishing a paper on that topic in the near future. 

Chairman Gruenberg noted that Credit Suisse was the first 

G-SIB to fail since the 2008 crisis. Although a resolution plan 

was in place, the assisted merger option was chosen instead. He 

went on to note that, as Mr. Tetrick had said, in the United 

States the pieces are in place to execute an orderly resolution 

of a G-SIB and the FDIC would be issuing a paper on that topic. 

Member Reed mentioned that one tool potentially available 

to authorities would be to communicate with a bank’s board to 

express concerns about the bank. He said that, in his 

21 
 

 

experience, such a communication from authorities would result 

in a notable reaction by the board. 

There being no more comments, Chairman Gruenberg thanked 

Dr. Hüpkes and Mr. Laviola for their presentations. 

The Chairman then adjourned the meeting for lunch at 12:37 

p.m. The meeting resumed at 1:52 p.m. 

Session 3: Large Bank Strategy and Resolution Options 

Mr. Tetrick began by discussing some of the challenges 

experienced when marketing large regional banks this past 

spring, which included dealing with expedited timelines and the 

lack of strong bids. He mentioned welcoming non-conforming bids, 

but that for each transaction, cost was the determinative 

factor. He then briefly described some of the unique features of 

each of the recent transactions: Signature Bank, SVB, and First 

Republic. 

Mr. Tetrick then recognized Shawn Khani, Deputy Director, 

Division of Resolutions and Receiverships, to discuss the work 

FDIC staff has been doing to dispose of the remaining assets of 

these transactions. Mr. Khani emphasized that the FDIC had to 

resolve these assets in an orderly way in order to avoid further 

disruption or knock-on effects. 

Mr. Khani also mentioned the FDIC’s statutory obligations 

as receiver to maximize recoveries, minimize losses, ensure 

adequate competition, prohibit discrimination, and maximize 

preservation of the availability and affordability of low- and 

middle-income affordable housing. He then noted how FDIC staff 

ensured these obligations were met. 

Mr. Tetrick described some of the strategic problems moving 

forward for the resolution of large banks and potential 

opportunities for the FDIC to take action to make large bank 

sales more likely and less costly. 

Member Reed noted the importance of understanding bank 

customers when trying to market these transactions to potential 

acquirers. 

Member Herring questioned whether the FDIC drove a hard 

enough bargain when marketing SVB given the market value of its 

acquirer, First Citizens Bank, went up by forty percent shortly 

after the transaction. He also asked whether the FDIC staff 

22 
 

 

 

considered “too-big-to-fail" aspects of bids in their 

evaluation. 

Mr. Tetrick noted that JP Morgan’s bid on First Republic 

was clearly the least-cost bid, which gave staff no choice but 

to accept it. However, he emphasized that staff are looking for 

opportunities for regional banks to be more competitive in this 

process. 

Member Tahyar commented that the bidding history for these 

transactions demonstrated that FDIC staff are being tough 

negotiators in trying to get to least-cost outcomes. She also 

noted the importance of data rooms in facilitating this process, 

and her agreement with the IDI rule’s new data room 

requirements. She asked whether the estimated number announced 

as loss to the DIF from a bank failure includes the results from 

later sales. Mr. Tetrick responded that yes, it is a projected 

number. 

Member O’Connor emphasized that we should avoid 

characterizing everything “too-big-to-fail" in the same way, 

noting that new liquidity and capital rules and resolution plans 

should make people feel better. She asked how FDIC staff was 

thinking about market depth for zero-risk-weighted assets such 

as treasuries and how regulatory requirements target those 

particular assets. Mr. Tetrick noted that FDIC staff had 

observed this problem, but that the FDIC was not entirely in a 

position to solve it. 

Member Mayopoulos added additional context on why the First 

Citizens Bank transaction was so complicated and difficult to 

evaluate. 

Member Cunliffe asked if there were any difficulties with 

Anti-Money Laundering (AML) or Countering the Financing of 

Terrorism (CTF) regulation or conduct. He also questioned 

whether the FDIC kept the crypto-related assets because of any 

certain concerns. Mr. Tetrick responded that bidding banks had 

the option to purchase the digital and crypto assets but did not 

want to take on an association with the crypto-related assets of 

the failed banks. 

Member Cohn asked if a bank charter was required to get to 

the final bidding stage or if the FDIC was willing to grant bank 

charters to entities that had better bids. Mr. Tetrick responded 

that bank charters are required to assume deposits, but that the 

23 
 

 

FDIC does not grant bank charters unless in the context of a GSIB failure. Mr. Cohn followed up by suggesting the FDIC 

consider potentially creating a bank relatively quickly to solve 

one of these problems in lieu of creating a bigger G-SIB by 

having a third party put up risk capital. 

Member Peterson asked about FDIC staff incentives and how 

value capture is balanced with speed when evaluating these 

transactions. Mr. Tetrick responded that value is prioritized 

and every decision is made based on the cost to the DIF. 

Member Bair asked if there were any crypto-related assets 

at SVB and how those were dealt with. Mr. Tetrick responded that 

he was not aware of any crypto assets, but that all deposits 

were assumed. 

Member Bair asked if there was still outstanding guidance 

related to what entities needed to do to get a new bank charter 

and bid on a failing institution, and if there has been thought 

on updating it. Mr. Starke said that guidance was still 

available, but that interest in that issue had waned. Instead, 

he noted, recently firms were more interested in partnering with 

banks. 

Member O’Connor asked how many bank charters are issued on 

a twelve-month basis. Chairman Gruenberg responded that, over 

the last five years, there have been fifty or sixty de novo 

institutions. 

Chairman Gruenberg highlighted the significant amount of 

multi-family housing properties the FDIC came to own as a result 

of the Signature Bank failure and the excellent job that Mr. 

Khani and his team have done in managing those assets. 

After this discussion, the meeting stood in recess from 

2:45 p.m. to 3:01 p.m. 

Session 4: Large Bank Policy Considerations 

Ms. Traille recognized Rae-Ann Miller, Senior Deputy 

Director, Division of Risk Management Supervision; Jon Pogach, 

Senior Economic Researcher, Division of Insurance and Research; 

Andy Felton, Deputy Director, CISR; Betsy Falloon, Senior 

Resolution Readiness Advisor, CISR; and Dena Kessler, Acting 

Senior Counsel, Legal Division. 

24 
 

Ms. Miller discussed supervisory policy changes and 

priorities for 2024 as well as general background information on 

how bank examinations are conducted. She noted changes to 

examiner instructions on concentrations and guidance for 

examiners as it relates to escalation of supervisory matters. 

She also mentioned the recently issued rulemaking on corporate 

governance requiring a “three lines of defense” type of risk 

management system. 

Mr. Pogach described the deposit insurance reform report 

that was released in May which provides a comprehensive overview 

of the deposit insurance system and presents options for reform 

to address current risks facing the system. He noted that 

targeted coverage, which allows for different levels of deposit 

insurance across different accounts, captures many of the 

financial stability benefits of expanded coverage while 

mitigating many of the more undesirable consequences of other 

options. 

Mr. Felton described the NPR to establish long-term debt 

requirements for regional banks, which was issued jointly with 

the Federal Reserve and OCC in August. He noted that the 

requirement is likely to improve financial stability and 

mitigate a number of resolution challenges the FDIC has 

encountered with the failure of large regional banks. 

Ms. Falloon described the FDIC’s proposed rulemaking for 

IDI resolution plans. The proposed rulemaking will restate the 

current rule and will incorporate lessons learned through plan 

reviews, submissions and feedback that the FDIC has undertaken 

over the years, as well as the lessons learned from recent bank 

resolutions. 

Member Bair expressed her enthusiasm and support for these 

proposals. She raised a concern regarding reliability of early 

warning metrics and whether the FDIC is acting fast enough when 

banks begin to deteriorate. Ms. Miller acknowledged the concern 

and agreed that better and more disaggregated information will 

make the banking system safer and more transparent. She also 

noted, however, that the industry has pushed back when the FDIC 

has tried to gather disaggregated liability-side information. 

Member O’Connor expressed support for the long-term debt 

requirement and challenged the FDIC to continue monitoring the 

25 
 

 

growing proportion of uninsured deposits including understanding 

where this money is going and coming from. 

Member Tahyar expressed her support for resolution planning 

in general and for maintaining the cooperative nature of the 

process. She urged the FDIC to try to align like-policy 

initiatives—such as Title I and Title II plans, as well as the 

OCC, Federal Reserve, and FDIC corporate governance rules—as 

best as possible so as not to double burden entities. 

Member Bernanke asked to what extent the FDIC was 

evaluating other runnable liabilities, besides deposits, when 

thinking about liquidity requirements for stable banks. Ms. 

Miller responded that the FDIC takes a holistic approach to the 

liability side of the balance sheet, and that the review is 

forward-looking. She also noted that FDIC examiners are 

expected to analyze each identified concentration. She also 

noted the need to update methods as circumstances change. 

Member Herring asked how much FDIC staff had thought about 

how to structure the long-term debt requirement as it relates to 

a bank’s holding company. Mr. Felton responded that the majority 

of banks covered by the proposal already have debt issued to the 

market. 

Member Kohn asked about the FDIC’s ability to have staff 

flexibility. He also asked if consideration was given to 

limiting the systemic risk exception to demand deposits and 

zero-interest deposits only. Lastly, he stated that he was 

strongly supportive of the long-term debt proposal, but wondered 

if the FDIC had considered the potential problem arising from 

bailing in debt during a period of market stress. Ms. Miller 

highlighted the FDIC’s ongoing focus on examination staffing, to 

include working to make the position more attractive. This will 

contribute to the needed flexibilities. Mr. Felton responded 

that when it came to issuing long-term liabilities, banks could 

wait a month or two if market conditions were less favorable, 

but that it depends on the facts and circumstances at the time. 

Member LaSalla asked whether a liquidity coverage ratio 

mechanism might be a solution to thinking about issues with 

uninsured deposits. Ms. Miller responded by saying that 

secondary sources of liquidity did not hold because the amount 

of uninsured deposits was just too high. She also noted the 

26 
 

 

 

 

 

 

 

 

 

 

_________________________________ 

importance of understanding the liability side of the balance 

sheet and of appropriately applying risk management principles. 

Member Kohn discussed the impact of bank clients’ ability 

to quickly move money in and out of accounts and how old stress 

tests did not really take this into consideration. Additionally, 

he noted that there is increasing competition for certain types 

of runnable assets. 

Member Herring emphasized the need to re-evaluate liquidity 

stress testing assumptions. The current assumptions may 

overestimate the ability to liquidate high quality liquid assets 

at face value in stress. Member O’Connor reiterated the need to 

consider the depth of the market and its ability to bear the 

sale of assets. 

The Chairman asked if there was anything else for today’s 

meeting. 

Closing Remarks 

Following the presentations and all of the related 

discussion, Chairman Gruenberg thanked the members for 

participating in the meeting and for their very helpful 

feedback. He expressed that he is looking forward to meeting 

with the Committee again next year. 

The meeting was adjourned at 4:13 p.m. 

Debra A. Decker 

Executive Secretary 

and Committee Management Officer 

Federal Deposit Insurance Corporation 

FDIC Systemic Resolution Advisory 

Committee 

27 
 

 

 

 

 

_________________________________________________ 

Minutes 

of 

The Meeting of the Systemic Resolution Advisory Committee 

of the 

Federal Deposit Insurance Corporation 

Held on the 7th Floor 

Federal Deposit Insurance Corporation Building 

Washington, D.C. 

Open to Public Observation in Person and via Webcast 

December 5, 2023 – 9:00 A.M. 

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

complete. 

Martin J. Gruenberg 

Chairman 

Board of Directors 

Federal Deposit Insurance Corporation