Office of Complex Financial Institutio

International Coordination Group

International Resolution Coordination Overview

January 25, 2012
Our Mission To promote public confidence and maintain 

financial stability during periods of financial and crisis by effectively coordinating the croborder resolution of G-SIFIs.

 To support the execution of an orderly resol

strategy by seeking the cooperation of key hcountry supervisors to: 

 mitigate systemic shocks by limiting precipitous inte

and

 preserve global franchise value by sustaining critica

operations and core functions at viable foreign enti
Our Approach to Crafting an Effective International Resolutio The key to a successful cross border resolution 

SIFI is to keep it as simple as possible by:

 Identifying the jurisdictions where important functions 

critical operations are located in advance;

 Identifying the nature of the legal entities conducting t

activities and the type of local licenses held;

 Engaging in purposeful dialogue in advance with app

local regulators, identifying obstacles to orderly resoluaddressing them through both rule changes and bilatecooperation; and 

 Concluding MOUs with affected jurisdictions covering 

information sharing and cooperation both in advance during, a crisis.
Identifying Key Jurisdictions –Overview of Heat Map Exercise

Bahamas 

Luxembourg 1% 

South Africa 1% 

Brazil 1% 

Cayman Islands 3% 2% 

Mauritius 8% 

99%

1%5%

82%

SIFI D

Total 97% 98% 95% 98% 

Ireland 

Germany 2% 

India 1% 

Singapore 1% 2% 2% 

Australia 1% 4% 3% 

Japan 1% 5% 4% 

United Kingdom 93% 91% 84% 89% 

Reported Foreign Activity* SIFI A SIFI B SIFI C SIFI E

by Jurisdiction**

* “Reported Foreign Activity“ encompasses sum of (i) assets, (ii) off balance sheet derivatives notional amounts, and 

sheet items (e.g., Letters of credit, guarantees and unused commitments) of reported foreign subsidiaries and bran

** For each SIFI, information is populated only for the top 5 countries. The blanks indicate that the corresponding juri

of the top 5 jurisdictions of the identified SIFI.
Heat Map Exercise – A Few Fin For each of the top 5 U.S. SIFIs:

 over 90% of the “total reported foreign activity” is 

in 1 to 3 foreign jurisdictions. 

 over 80% of the “total reported foreign activity” c

from legal entities located in United Kingdom.

 13 jurisdictions cover over 97% of “total re

foreign activity” of the top 5 U.S. SIFIs.

 Over 85% of each SIFI’s “total reported fo

activity” comes from 2 to 4 legal entities. 
Identify Potential Legal Obstacles to the Successful Execution of a Resolution St Change of control requirements Ring-fencing and liquidation triggers Lack of broad based stay of closeout/netting of derivatives and other q

financial contracts (QFCs)

 Divergent insolvency legal framewor Diverse regulatory frameworks
Coordinate with Foreign Regula Bilateral Memoranda of Understanding (MOUs): 

 Existing MOUs. We have existing MOUs concerning 

matters with the following authorities:

 Bank of England UK Financial Services Authority China Banking Regulatory Commission

 Other Jurisdictions. We are initiating or will initiate dis

with authorities in Ireland, Japan, India, Netherlands, Germany, Cayman Islands, Mexico, Singapore, AustrMauritius, South Africa, Hong Kong, Luxembourg and Bahamas to conclude MOUs in 2012.
Other Initiatives in 2012 Financial Market Utilities (FMUs): 

 Heat map usage of FMUs by G-SIFIs and 

FMUs that are critical to each G-SIFI

 Ascertain how appointment of receivership 

parent level may affect a SIFI’s membershcritical FMUs

 Key Support Operations:

 Identify data centers and profit centers
The Bottom Line... Large, globally active financial firms are 

They can be restructured on a global basusing a variety of techniques in a resolutscenario, just as they do in a going conc“business as usual” context.

 Boards of Directors authorize such trans

all the time to maximize shareholder valu
Tools under Dodd-Frank Ac We have powerful tools under Title I and 

of the Dodd-Frank Act to help facilitate sactions: 

 Advance planning and knowledge gathering thro

“living wills” exercise

 Ability to make liquidity available to the failed ins

viable businesses, as necessary

 Ability to stay close-out and netting of derivatives 

other QFCs domestically

 Ability to form bridge institutions and, if necessar

separate businesses and assets to achieve varioobjectives
Keys to a Successful Cross BoResolution Are... In summary, the keys to a successful cros

border, orderly resolution of a globally actiinstitution include:

 advance planning a good understanding of the institution’s global fo active advance coordination with fellow regulator jurisdictions having harmonized resolution tools

 Work is underway under the auspices of the Finan

Stability Board to achieve this objective.
FDIC Engagement in Multilateral ResolutioPolicy-making

 Basel Committee - Cross-Border Crisis Managemen

(CBRG)

 FDIC Co-Chair Group since inception in 2007 10 Recommendations in 2008 Report  2010 Survey: Found some progress but much yet to b

 Financial Stability Board 

 Key Attributes for Effective Resolution Regimes

 Comprehensive set of core elements that the FSB consi

necessary for an effective resolution regime. Their impleshould allow authorities to resolve financial institutions in manner without taxpayer exposure to loss from solvency while maintaining continuity of their vital economic funct

 Crisis Management Groups for each G-SIFI

 Timeframes for resolvability assessments and recovery 

resolution plans