Office of Complex Financial Institutio

Dodd-Frank Act Title I

Living Wills Overview

January 25, 2012
Dodd-Frank Act Resolution Plan Rule

 Covered companies are required to submit to the FDIC, FRB and FSOC a

plan for their rapid and orderly resolution under the Bankruptcy Code. Covcompanies are

 Bank holding companies, including foreign banks with US operations, with $50 billion 

assets; and

 Nonbank financial companies designated by FSOC for enhanced supervision by the 

 Staggered annual filings, beginning July 1, 2012, through December 31, 2 Must include a strategic analysis showing how to accomplish a rapid and 

resolution in manner that mitigates serious adverse effects on US financia

 Focus on identifying core business lines and critical operations and mapp

entities

 Requires identification of funding, liquidity needs, interconnections and 

interdependencies, and management information systems

 If the FRB and FDIC determine a plan is not credible or would not lead to 

resolution, more stringent prudential requirements, and, ultimately restrucbe imposed
Resolution Plans required for Insured Depository Institu(IDIs) with $50 billion or more in total assets Rule requires a covered IDI to submit annually to the FDIC a plan that w

the FDIC, as receiver, to resolve the institution under the Federal DeposAct at the least cost to the institution’s creditors

 Complements the Dodd-Frank Act resolution plan rule

 Staggered filings beginning July 1, 2012, through December 31, 2013, (

165d Rule)

 Purpose of the Rule is to facilitate the FDIC’s resolution of the insured in

independently of its parent company and non-bank affiliates in manner w

 Provides depositors access to insured deposits within 1 day Maximizes NPV return on assets Minimizes loss to creditors, including deposit insurance fund

 Requires an analysis and discussion of impediments to or operational co

that would inhibit a resolution

 Provides the FDIC with information and data necessary to perform an or

resolution
Living Wills

 Rule making requires that each SIFI or insured depository institution p

resolution plan in order to:

 Provide regulators with an understanding of the firm’s structure, complexity a

operations, as well as strategies to resolve the SIFI under the Bankruptcy Co

Deposit Insurance Act, or other resolution regime as applicable

 Assist the Federal Reserve Board & FDIC in their efforts to ensure that SIFIs 

manner that is both safe and sound and that does not pose risks to the finan

United States

 Provide for the rapid and orderly resolution of a SIFI in the event of material 

or failure

 Provide a plan to fund critical operations during the resolution process

 The Living Wills process has laid the groundwork to encourage each co

focus on:

 Resolution planning and strategy

 Evaluating and streamlining complex legal structures

 Title I plan submissions will inform and help refine FDIC’s Title II planni Rules establish a tiered submission and review process with the first gr

plans on July 1, 2012
Regulatory Process

Regulators are working with SIFIs monthly on structure and content of re

Regulators do not want pure data submissions - SIFIs must submit i

support resolution strategies and a description of how to implement 

Regulators providing guidance

SIFIs providing feedback

Covered

SIFI
Dodd Frank Resolution Plan Review

The review process has two stages:

1) Completeness Review: 

 After receipt of the plan, the FRB and FDIC will determine within 60 da

informationally complete

2) Credibility Review:

 After the submission is deemed informationally complete, the FRB and 

the credibility of the resolution plan

 The initial plans will provide the foundation for developing more robust 

plans over subsequent years

SIFI Resolution Plan under Dodd-Frank 165 (d) Timing

• The DFA Rule requires the 

FRB and the FDIC to review a submitted resolution plan within 60 days and to notify the SIFI in writing if the resolution plan lacks information required by the DFA Rule or if the FRB or FDIC requires additional information to facilitate review of the resolution plan. 

• The SIFI must provide 

required additional information no later than 30 days after it receives the notice requesting information.

• Wi

recdefshothe mamuresaddidedeor reqdef

9

FRB and FDIC 

Credibility Review

30-Days for SIFI

to Respond

60-Day FRB and FDICCompleteness Review

SIFI Submits 

Resolution Plan

• After the submission of 

the resolution plan is determined informationally complete, the FRB and FDIC will jointly review to determine if the resolution plan will facilitate a rapid and orderly resolution of the SIFI under the Bankruptcy Code or other regime. A joint notice will be issued if plan is found to be deficient.
Focus on Potential Impediments to Resolution

 Complexity of the Organizational Structure

 Operation of business lines across legal entities and legal jurisdicti Mapping of business lines and critical operations to the legal entitie

for their on-going operation

 Extent of intra-company receivables/payables/guarantees/service l

agreements and back-to-back Qualified Financial Contracts (QFCs

 Extent of International Operations

 Avoidance of precipitous actions such as ring fencing, administratio

liquidation

 Extent of QFC activity

 International ISDA QFC agreements Quality of information related to identification of legal entities, nettin

counterparties, collateral amounts and location, especially internat

 Liquidity Needs/Funding Mechanisms Exit Strategies
Preparation by RegulatorsIn preparing for the delivery of the first set of Resolution Plans, Regu

 Meeting monthly with the SIFIs to provide for guidance in anticip

Title I submissions

 Continuing to increase staff and build out infrastructure to manag

submission process

 Developing policies and procedures for the review of the plans Managing broad based outreach and international coordination e

minimize the variances between cross-border resolution plan req

 Conducting dialogue and coordination regarding general Title I is

SIFI-specific issues