27464 Federal Register / Vol. 75, No. 94 / Monday, May 17, 2010 / Proposed Rules 

paragraph is corrected to read as 

follows: For additional information, see 

the Direct Final Rule published in the 

Rules and Regulations section of the 

Federal Register on May 6, 2010 (75 FR 

24786). Also, on page 25121, in the first 

column, the eighth full paragraph is 

corrected to read as follows: For 

additional procedural information and 

the regulatory analysis, see the direct 

final rule published in the Rules and 

Regulations section of the Federal 

Register on May 6, 2010 (75 FR 24786). 

Dated at Rockville, Maryland, this 10th day 

of May 2010. 

For the Nuclear Regulatory Commission. 

Helen Chang, 

Acting Chief, Rules, Announcements and 

Directives Branch Division of Administrative 

Services, Office of Administration. 

[FR Doc. 2010–11562 Filed 5–14–10; 8:45 am] 

BILLING CODE 7590–01–P 

FEDERAL DEPOSIT INSURANCE 

CORPORATION 

12 CFR Part 360 

RIN 3064–AD59 

Special Reporting, Analysis and 

Contingent Resolution Plans at Certain 

Large Insured Depository Institutions 

AGENCY: Federal Deposit Insurance 

Corporation (‘‘FDIC’’). 

ACTION: Notice of proposed rulemaking. 

SUMMARY: The FDIC is seeking comment 

on a proposed rule that would require 

certain identified insured depository 

institutions (‘‘IDIs’’) that are subsidiaries 

of large and complex financial parent 

companies to submit to the FDIC 

analysis, information, and contingent 

resolution plans that address and 

demonstrate the IDI’s ability to be 

separated from its parent structure, and 

to be wound down or resolved in an 

orderly fashion. The IDI’s plan would 

include a gap analysis that would 

identify impediments to the orderly 

stand-alone resolution of the IDI, and 

identify reasonable steps that are or will 

be taken to eliminate or mitigate such 

impediments. The contingent resolution 

plan, gap analysis, and mitigation efforts 

are intended to enable the FDIC to 

develop a reasonable strategy, plan or 

options for the orderly resolution of the 

institution. The proposal would apply 

only to IDIs with greater than $10 

billion in total assets that are owned or 

controlled by parent companies with 

more than $100 billion in total assets. 

DATES: Comments must be submitted on 

or before July 16, 2010. 

ADDRESSES: You may submit comments 

by any of the following methods: 

• Agency Web Site: http:// 

www.fdic.gov/regulations/laws/federal. 

Follow instructions for submitting 

comments on the Agency Web Site. 

• E-mail: Comments@FDIC.gov. 

Include ‘‘Special Reporting, Analysis 

and Contingent Resolution Plans at 

Certain Large Insured Depository 

Institutions’’ in the subject line of the 

message. 

• Mail: Robert E. Feldman, Executive 

Secretary, Attention: Comments, Federal 

Deposit Insurance Corporation, 550 17th 

Street, NW., Washington, DC 20429. 

• Hand Delivery/Courier: Guard 

station at the rear of the 550 17th Street 

Building (located on F Street) on 

business days between 7 a.m. and 5 p.m. 

(EST). 

• Federal eRulemaking Portal: http:// 

www.regulations.gov. Follow the 

instructions for submitting comments. 

Public Inspection: All comments 

received will be posted without change 

to http://www.fdic.gov/regulations/laws/ 

federal including any personal 

information provided. Comments may 

be inspected and photocopied in the 

FDIC Public Information Center, 3501 

North Fairfax Drive, Room E–1002, 

Arlington, VA 22226, between 9 a.m. 

and 5 p.m. (EST) on business days. 

Paper copies of public comments may 

be ordered from the Public Information 

Center by telephone at (877) 275–3342 

or (703) 562–2200. 

FOR FURTHER INFORMATION CONTACT: 

Keith Ligon, Chief, Exam Support 

Section, Division of Supervision and 

Consumer Protection, (202) 898–3686, 

or James Marino, Project Manager, 

Division of Resolutions and 

Receiverships, (202) 898–7151, or Shane 

Kiernan, Senior Attorney, Legal 

Division, (703) 562–2632, or Mark 

Flanigan, Counsel, Legal Division, (202) 

898–7426, or John Dorsey, Counsel, 

Legal Division, (202) 898–3807, or 

Richard A. Bogue, Counsel, Legal 

Division, (202) 898–3726, or Carl J. 

Gold, Counsel, Legal Division, (202) 

898–8702. 

SUPPLEMENTARY INFORMATION: 

I. Special Reporting, Analysis and 

Contingent Resolution Plans at Certain 

Large Insured Depository Institutions 

(A) Authority for Proposed Regulation 

The FDIC is charged by Congress with 

the critical responsibility of insuring the 

deposits of banks and thrifts in the 

United States, and with serving as 

receiver of all such institutions if they 

should fail. As of December 31, 2009, 

the FDIC insured approximately $4.75 

trillion in deposits in more than 8,000 

depository institutions. In implementing 

the deposit insurance program, and in 

efficiently and effectively resolving 

failed depository institutions, the FDIC 

strengthens the stability of the banking 

system and helps maintain public 

confidence in the banking industry in 

the United States. In its efforts to 

achieve this objective and to implement 

its insurance and resolution functions, 

the FDIC requires a comprehensive 

understanding of the organization, 

operation and business practices of 

banks and thrifts in the United States, 

with particular attention to the nation’s 

largest and most complex insured 

depository institutions that account for 

nearly half of the FDIC’s insurance risk. 

To carry out these core 

responsibilities, the proposed regulation 

requires a limited number of the largest 

insured depository institutions to 

provide the FDIC with essential 

information concerning their structure, 

operations, business practices and 

financial responsibilities and exposures. 

The proposed regulation requires these 

institutions to develop and submit 

detailed plans demonstrating how such 

depository institutions could be 

separated from their affiliate structure 

and wound down in an orderly and 

timely manner in the event of 

receivership. The proposed regulation 

would also make a critically important 

contribution to the FDIC’s 

implementation of its statutory 

receivership responsibilities by 

providing the FDIC as receiver with the 

information it needs to make orderly 

and cost effective resolutions much 

more feasible. 

The Federal Deposit Insurance Act 

gives the FDIC broad authority to carry 

out its statutory responsibilities, and to 

obtain the information required by the 

proposed regulation. The authority to 

issue the proposed regulation is 

provided by Section 9(a) Tenth of the 

FDI Act, 12 U.S.C. section 1819(a) 

Tenth, authorizing the FDIC to 

prescribe, by its Board of Directors, such 

rules and regulations as it may deem 

necessary to carry out the provisions of 

the FDI Act or of any other law that the 

FDIC is responsible for administering or 

enforcing. The FDIC also has authority 

to adopt regulations governing the 

operations of its receiverships pursuant 

to Section 11(d)(1) of the FDI Act. 12 

U.S.C. section 1821(d)(1). Collection of 

the information required by the 

regulation is also supported by the 

FDIC’s broad authority to conduct 

examinations of depository institutions 

to determine the condition of the IDI, 

including special examinations, 12 

U.S.C. section 1820(b)(3). 

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Federal Register / Vol. 75, No. 94 / Monday, May 17, 2010 / Proposed Rules 27465 

1The recent financial crisis, for example, saw the 

collapse of several major financial services holding 

companies whose primary business activities were 

not housed in an insured depository institution. 

These institutions included Bear Stearns, Lehman 

Brothers and American International Group (AIG). 

Each of these financial holding companies was 

subject to the jurisdiction of the bankruptcy courts. 

Broker-dealer subsidiaries of parent holding 

companies that are members of the Securities 

Investor Protection Corporation (SIPC) are subject to 

a combination of the Securities Investor Protection 

Act (SIPA) and the Bankruptcy Code. Further, the 

rehabilitation, restructuring or liquidation of 

insurance company subsidiaries is governed by 

unique State insurance insolvency codes, which 

differ from State to State, and often also may lead 

to State judicial proceedings. 

Finally, a failure of an IDI to provide 

the information required by this 

regulation would constitute a regulatory 

violation that would allow the FDIC to 

initiate the process of deposit insurance 

termination (12 U.S.C. section 

1818(a)(2)), or to use backup 

enforcement authority of the FDIC 

under 12 U.S.C. section 1818(t). This 

backup enforcement authority allows 

the FDIC, after notice to the primary 

Federal regulator, to pursue FDI Act 

section 8 enforcement actions, including 

cease-and-desist orders, civil money 

penalties, and removal and prohibition 

actions. 

(B) Background 

Over the past decades, the size and 

complexity of insured depository 

institutions (‘‘IDIs’’) have evolved 

dramatically. More recently, and as a 

result of the financial crisis, the 

industry has seen further consolidation 

and continued expansion in the scope of 

insured depository institutions’ 

activities, operations, and risks. As a 

result of continued consolidation of the 

U.S. banking industry, the FDIC’s 

insurance risk is now concentrated in 

the largest and most complex insured 

depository institutions. Today, almost 

half of the FDIC’s deposit insurance 

exposure is accounted for by fewer than 

40 large institutions that exist within 

even larger conglomerate and 

multinational structures. 

These large and complex IDIs present 

profound challenges to the FDIC both as 

insurer and when it must act in its 

receivership capacity. The complexity 

of these IDIs, the extensive financial 

interrelationships within the 

conglomerates, and the likely presence 

of competing statutory regimes that may 

apply to the IDI, its parent corporation 

and key affiliates, result in opaque 

structures that prevent the FDIC from 

gaining access to information that is 

essential to the FDIC’s assessment of its 

risks as insurer and to its ability to 

resolve the IDI in a cost-effective and 

timely fashion as receiver, in the event 

of failure. Also, given the extensive 

interconnectedness of the IDI with its 

parent and affiliates, the FDIC can be 

significantly hindered in its mission to 

effect an orderly and timely resolution, 

minimize cost to the insurance fund, 

and to maximize recoveries to 

depositors and other claimants. This 

mission is separate and distinct from the 

mission of the primary Federal 

supervisor. Complementing the 

supervisory oversight of the primary 

Federal regulator, the FDIC’s role as 

insurer and resolver requires a distinct 

focus on loss severities, default risks, 

complexities in structure and 

operations, and other factors that impact 

risk to the fund and the ability of the 

FDIC to effect an orderly resolution. 

The proposed rule is intended to 

ensure that the FDIC has access to all 

the information it needs to assess its 

insurance risk in connection with large 

IDIs existing within such structures, and 

to efficiently resolve such IDIs in the 

event of failure. The rule requires 

identified IDIs to compile information, 

conduct analyses and develop plans that 

will enable the FDIC to understand and 

anticipate the operational, managerial, 

financial and other aspects of the IDI 

that would complicate efforts by the 

FDIC, as receiver, to extract the IDI from 

the larger enterprise, determine and 

maximize franchise value, and conduct 

a least-cost transaction. 

Organizational and operational 

complexity of the largest IDIs results in 

opaque structures. The very largest IDIs 

reside within bank, thrift and financial 

holding company structures that 

include an extensive network of 

affiliated companies offering both 

banking and non-banking products and 

services. Management and operation of 

these complex entities is typically 

organized along business lines rather 

than by legal entity. Key decisions 

affecting the IDI, and key services or 

functions relating to the IDI, are often 

made outside the IDI, by parent holding 

companies or affiliates of the IDI. 

Complex financial and other 

interrelationships within such groups 

(for example, guaranties, derivatives 

trades, contractual commitments, 

service agreements, information 

technology agreements, staffing 

allocations, human resource and related 

administrative support ties) create 

further interdependencies that can 

significantly impact resolution strategy 

and the conduct of an orderly and 

timely resolution. IDIs often rely upon 

affiliates for the provision of critical 

operations and services without which 

the IDI cannot continue to smoothly 

function, which in a resolution context 

threatens its franchise value and the 

FDIC’s ability to conduct an effective 

resolution. 

Further complications result from the 

presence of distinct statutory insolvency 

regimes specific to the various legal 

entities within the conglomerate, which 

often have different, and sometimes 

competing, goals. Insured banks and 

thrifts are subject to the FDI Act and are 

resolved by the FDIC. The insolvency of 

bank, thrift and financial holding 

companies and most of their noninsured financial subsidiaries are 

subject to the Bankruptcy Code.1 These 

competing regimes result in disputes 

over assets, intra-affiliate claims and 

litigation, and can increase the cost of 

the resolution and impair its efficiency. 

The FDIC has determined that there is 

a compelling need for better information 

and planning to separately resolve the 

insured depository institution as a 

distinct entity. For example, in certain 

receiverships, staff and human 

resources have been provided by the 

parent organization, impeding the 

receiver’s ability to effect a smooth and 

orderly transition of services to the 

community. Critical information 

technology support services are 

frequently conducted outside the 

insured entity, forcing the receiver to 

seek continuity of such key services. 

The FDIC has witnessed the inability of 

large and complex insured depository 

institutions to identify the location and 

legal owner of assets, to separate 

liquidity needs and funding sources of 

the insured entity, and even to identify 

a separate line management team to 

conduct operations during a resolution. 

The FDIC, moreover, has been routinely 

engaged in disputes over assets, lien 

claims, and related litigation with 

parents and affiliates, draining 

receivership resources, extending the 

duration of the receivership and 

delaying the prompt resolution of 

claims. 

The proposed rule is consistent with 

and will assist in the implementation of 

‘‘Resolution Plan’’ legislation pending in 

both houses of Congress. Pending 

reform legislation now in both houses of 

Congress requires wind-down and 

resolution plans to be submitted by 

identified large bank holding companies 

or non-bank financial companies, 

pursuant to regulations to be adopted 

jointly by the FDIC and the Board of 

Governors of the Federal Reserve 

System (‘‘FRB’’). This important 

Congressional initiative is fully 

consistent with the conclusion by the 

FDIC, based on its experience in the 

current financial crisis as receiver 

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27466 Federal Register / Vol. 75, No. 94 / Monday, May 17, 2010 / Proposed Rules 

charged with responsibility for resolving 

failed banks (especially large and 

complex IDIs), that comprehensive 

wind-down plans for large and complex 

IDIs are essential for their orderly and 

least-cost resolution. It is for that reason 

that the FDIC is proposing that the 

process of developing plans for such 

IDIs should begin promptly. This 

initiation of that process by FDIC under 

the authority of the FDI Act will in no 

way conflict with the mandate of the 

FDIC and the FRB under the pending 

legislation to establish rules and 

administer a system of resolution 

planning for large bank holding 

companies and non-bank financial 

companies. Indeed, the joint planning 

process to be conducted by the FDIC 

and the FRB involving companies that 

include large or complex IDIs will be 

able to integrate earlier resolution 

planning that will take place under the 

FDIC proposed contingent resolution 

program, and such planning should be 

able to continue as a part of any 

proposal adopted by Congress. The 

FDIC, in implementing this proposal, 

will make every effort to coordinate its 

work with the separate joint planning 

process of the FDIC and the Federal 

Reserve to avoid duplication of effort. 

The proposed rule similarly supports 

and complements related international 

initiatives. At the 2009 Pittsburgh 

Summit, and in response to the recent 

financial crisis, the G20 Leaders called 

on the Financial Stability Board (FSB) to 

propose by the end of October 2010, 

possible measures to address the ‘‘too 

big to fail’’ and moral hazard concerns 

associated with systemically important 

financial institutions. Specifically, the 

G20 Leaders called for the development 

of ‘‘internationally-consistent firmspecific contingency and resolution 

plans’’ by the end of 2010. The FSB is 

pursuing further work to develop the 

international standards for contingency 

and resolution plans and to evaluate 

how to improve the capacity of national 

authorities to implement orderly 

resolutions of large and interconnected 

financial firms. 

The FSB’s program has built on work 

undertaken by the Basel Committee on 

Banking Supervision’s Cross-border 

Bank Resolution Group, co-chaired by 

the FDIC, since 2007. In its final Report 

and Recommendations of the Crossborder Bank Resolution Group, issued 

on March 18, 2010, the Basel Committee 

emphasized the importance of preplanning and the development of 

practical and credible plans to promote 

resiliency in periods of severe financial 

distress and to facilitate a rapid 

resolution should that be necessary. In 

its review of the financial crisis, the 

Report found that one of the main 

lessons was that the complexity and 

interconnectedness of large financial 

conglomerates of corporate structure 

made crisis management and 

resolutions more difficult and 

unpredictable. 

Similarly, the FSB’s Principles for 

Cross-Border Cooperation on Crisis 

Management commit national 

authorities to ensure that firms develop 

adequate contingency plans and 

highlight that information needs are 

paramount, including information 

regarding group structure, and legal, 

financial and operational intra-group 

dependencies; the interlinkages between 

the firm and financial system (e.g., in 

markets and infrastructures) in each 

jurisdiction in which it operates; and 

potential impediments to a coordinated 

solution stemming from the legal 

frameworks and bank resolution 

procedures of the countries in which the 

firm operates. The FSB Crisis 

Management Working Group has 

recommended that supervisors ensure 

that firms are capable of supplying in a 

timely fashion the information that may 

be required by the authorities in 

managing a financial crisis. The FSB 

recommendations strongly encourage 

firms to maintain contingency plans and 

procedures for use in a wind-down 

situation (e.g., factsheets that could 

easily be used by insolvency 

practitioners), and to regularly review 

them to ensure that they remain 

accurate and adequate. This proposed 

rule enhances and complements these 

international efforts. 

Conclusion. The FDIC believes that 

assessing its insurance risk and 

planning for resolution of covered IDIs 

require access to timely, complete and 

accurate information regarding the 

nature and structure of the IDI within 

the organization as well as its ability to 

extract and separate itself from its 

parent structure in contemplation of 

failure. These information and 

contingency planning requirements are 

the foundation for any meaningful 

analysis of IDI franchise value, least-cost 

resolution strategies, strategies to 

mitigate systemic risks and overall 

planning for an orderly resolution in the 

possible event of failure. The recent 

financial crisis has demonstrated that 

the risk of insolvency to an IDI can arise 

quickly, and that preparedness and 

planning must be conducted on a 

continuing basis, before problems 

become evident, and not merely in 

response to after-the-fact supervisory 

indicators. 

The Notice of Proposed Rulemaking 

The Notice of Proposed Rulemaking 

(‘‘NPR’’) sets forth information reporting 

requirements intended provide the FDIC 

with key information concerning the 

operations, management, financial, 

affiliate relationships and other aspects 

of IDIs operating within a complex 

conglomerate to permit the FDIC to 

more effectively carry out its duties as 

insurer and receiver. The NPR requires 

IDIs within the scope of the rule to 

prepare, and submit to the FDIC, a 

contingent resolution plan describing 

the means by which the IDI could be 

effectively separated from the rest of the 

conglomerate enterprise in the event of 

failure of the IDI or the bankruptcy of 

the parent company or any key affiliate 

of the IDI. It is intended that such a plan 

also will assist the FDIC, in the event of 

the failure of the IDI, in carrying out its 

responsibilities to resolve the failed 

institution in timely and cost-effective 

fashion. The rule proposes that the 

contingent resolution plan be submitted 

within 6 months of the effective date of 

the rule. The FDIC will review the plan 

in consultation with appropriate 

primary Federal regulator(s) and the 

institution to ensure the plan is 

effective, workable and satisfactory. The 

plan should be updated annually, and 

material information elements should be 

updated more frequently as reasonable 

and necessary, given the risk profile and 

structure of the institution relative to its 

affiliates and to demonstrate the 

capacity to provide specific information 

when needed (e.g., deposit flows, intragroup funding flows, short-term 

funding, derivatives transactions, or 

material changes to capital structure or 

sources). While much more information 

will be required to prepare for and 

implement an actual resolution, the 

information required under the 

proposed regulation focuses on key 

structures, exposures, and interlinkages 

necessary to evaluate and further 

develop the contingent resolution plan. 

The NPR is intended to reach large, 

complex insured depository 

institutions. Accordingly under the 

NPR, a ‘‘covered insured depository 

institution’’ (‘‘covered IDI’’) is defined as 

insured depository institutions with 

greater than $10 billion in total assets 

that are owned or controlled by parent 

companies with more than $100 billion 

in total assets. As of the fourth quarter 

of 2009, there were 40 such institutions, 

representing total assets of $8.3 trillion. 

These 40 institutions hold 

approximately 47.9% of all deposits 

insured by the FDIC. 

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Federal Register / Vol. 75, No. 94 / Monday, May 17, 2010 / Proposed Rules 27467 

Nature and Scope of Contingent 

Resolution Plan To Be Provided to the 

FDIC 

The FDIC is proposing that each 

covered IDI develop and provide to the 

FDIC a credible contingent resolution 

plan which sets forth detailed 

information needed to allow the FDIC to 

understand the scope and extent of the 

IDI’s business lines, operations, risks 

and activities, and especially to 

determine the nature and extent of 

interrelationships between the IDI and 

its affiliates; to identify and quantify 

non-obvious risks embedded within 

distinct business entities or units; to 

identify concentrations of risk and 

correlations among risks; and to develop 

an enterprise-wide and entity-specific 

vision of the covered IDI. 

Some of the required information is 

likely already to have been developed 

and/or reported elsewhere, and to the 

greatest extent possible, the FDIC 

expects to use such existing information 

and reports to minimize the regulatory 

burden on the covered IDIs. The FDIC 

recognizes that the information and 

analysis provided will be proprietary 

and highly confidential, and is not 

intended for disclosure. 

In addition to providing information, 

the contingent resolution plan should 

provide an analysis of the covered IDI’s 

ability to be resolved in an orderly 

fashion in the event of its receivership, 

or the insolvency of the parent or key 

affiliates. The analysis should reveal the 

covered IDI’s planning and gap analysis 

of its ability to separate the covered IDI 

from the conglomerate structure in the 

most cost-effective and timely fashion. 

The analysis and plan should reveal all 

material obstacles to an orderly 

resolution of the covered IDI and 

interconnections and interdependencies 

that would hinder the timely and 

effective resolution of the insured 

entity, and set forth specific, credible 

remediation steps or mitigating 

responses that would be required to 

eliminate or minimize such obstacles. 

In developing an analysis and plan, a 

covered IDI should consider the 

institution’s size relative to its parent 

company structure; its interdependence 

with the national and international 

marketplaces; as well as how easily its 

financial company products or services 

can be substituted. 

Standards for Content of Contingent 

Resolution Plan 

The following set forth the minimum 

standards for the contingent resolution 

plan to be provided by covered IDIs: 

• Provide sufficient information, 

covering material risks, business lines, 

operations, activities and exposures of 

the covered IDI and its subsidiaries 

necessary to permit development of an 

effective contingent resolution plan. 

• Set forth the institution’s analysis 

that identifies material impediments to 

an orderly resolution of the covered IDI 

in the event of its insolvency, the 

insolvency of its parent or critical 

affiliates, and describing the steps that 

are or will be taken to eliminate or 

mitigate such impediments. 

• Provide sufficient information to 

the FDIC to allow the FDIC to isolate the 

IDI and to allow for effective resolution 

strategy development and contingency 

planning for a period of severe financial 

distress, describing means of preserving 

franchise value, maximizing recovery to 

creditors, and minimizing systemic 

impacts on the financial system. 

• Provide a gap analysis tailored to 

the size, complexity and risk profile of 

the institution, provide remediation 

steps that are feasible and capable of 

execution within a reasonable time 

frame and set forth a time period within 

which remediation actions are to be 

concluded. 

• The contingent resolution plan 

must be approved by the institution’s 

Board of Directors or designated 

executive committee. 

• The contingent resolution plan 

must be updated on a regular, at least 

annual, basis, and demonstrate an 

ability to provide current and updated 

information on material elements as 

described in the regulation. 

Minimum Components of the Required 

Contingent Resolution Plan 

The proposed rule prescribes the 

elements of a contingent resolution plan 

intended to provide a complete review 

of the covered IDI and its relationships 

with its parent and affiliates, and key 

counterparties, to enhance preparedness 

for resolution. At a minimum the 

contingent resolution plan should 

include the following elements: 

Summary of Analysis and Contingent 

Resolution Plan. Summarize material 

impediments to an orderly resolution of 

the covered IDI separate from its parent 

company and affiliates and a 

description of specific, credible 

remedial or mitigating steps that are or 

would be taken to eliminate or 

minimize such impediments. For 

example, reliance upon affiliates to 

provide critical services can establish an 

impediment to transferring its assets, 

liabilities and operations to an acquiring 

institution or bridge bank. This gap may 

be remediated by the development of 

continuity provisions in relevant 

contracts or by establishing pre-arranged 

substitution for such services. 

Describe key assumptions underlying 

the analysis. Define short and long-term 

goals to remediate or mitigate identified 

impediments to separation and 

resolution. 

Organizational Structure. Includes the 

IDI’s, parent company’s, and affiliates’ 

legal and functional structures and 

identity of key personnel tasked with 

managing major components within the 

organization materially affecting the 

covered IDI. 

Business Activities, Relationships and 

Counterparty Exposures. Identify and 

describe the business activities of the 

covered IDI and its subsidiaries, 

including an explanation of material 

interrelationships among the entities in 

the organizational structure, e.g. major 

counterparties (especially for financial 

contracts) and affiliates that provide key 

services and support. Critical services 

that are provided by affiliates, such as 

servicing, information technology 

support and operations, human 

resources or personnel should be 

identified. This description should also 

provide an assessment of each key 

entity’s ability to function on a standalone basis. 

Capital Structure. Detail the covered 

IDI’s capital structure, as well as that of 

its parent, each subsidiary and key 

affiliates. Provide complete financial 

information in the form of audited 

financial statements presented along 

with line-item descriptions of the assets, 

liabilities, and equity comprising the 

balance sheets of the parent company as 

a consolidated entity as well as of each 

subsidiary or affiliated entity. Describe 

corporate financing arrangements for the 

institution, its subsidiaries, parent and 

key affiliates. Identify funding, 

liquidity, and refinancing risks 

associated with the various capital pools 

being utilized. 

Intra-Group Funding, Transactions, 

Accounts, Exposures and 

Concentrations. Relative to the IDI, 

describe intra-group funding 

relationships, accounts, and exposures, 

including terms, purpose, and duration. 

These would include, for example, a 

description of intra-group financial 

exposures, claims or liens, lending or 

borrowing lines and relationships, 

guaranties, asset accounts, deposits or 

derivatives transactions. Clearly identify 

the nature and extent to which the IDI’s 

parent or affiliates are to serve as a 

source of funding to the IDI, the terms 

of any contractual arrangements, the 

location of related assets, funds or 

deposits and the mechanisms by which 

funds can be down-streamed from the 

parent to the IDI. 

Systemically Important Functions. 

Describe systemically important 

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27468 Federal Register / Vol. 75, No. 94 / Monday, May 17, 2010 / Proposed Rules 

2The challenges related to cross-border 

resolutions, the nature and extent of planning, and 

relevant information needs are detailed in the 

Report and Recommendations of the Cross-border 

Bank Resolution Group, Basel Committee on 

Banking Supervision (March 2010); see especially 

Recommendation 6: ‘‘Planning in advance for 

orderly resolution’’. 

functions that the covered IDI, its 

subsidiaries and affiliates provide, 

including the nature and extent of the 

institution’s involvement in payment 

systems, custodial or clearing 

operations, large sweep programs and 

capital markets operations in which it 

plays a dominant role. Identify critical 

vulnerabilities, estimated exposure and 

potential losses, and why certain 

attributes of the businesses detailed in 

previous sections could pose a systemic 

risk to the broader economy. 

Material Events. Describe events, e.g., 

acquisitions, sales, litigation, 

operational and fiscal challenges, that 

have had a material effect on the IDI and 

its relationship with its parent or 

affiliates. 

Cross-Border Elements. Discuss the 

nature and extent of the IDI’s crossborder interrelationships and exposures; 

describe individual components of the 

group structure that are based or located 

outside the United States, including 

foreign branches, subsidiaries and 

offices. Provide detail on the location 

and amount of foreign deposits and 

assets. This information is necessary to 

facilitate the FDIC’s determination of 

the legal and policy framework under 

which such assets might be resolved in 

the event of insolvency, including the 

framework for providing liquidity, the 

terms and restrictions of government 

support, and the operational and 

technical challenges of international 

payment systems.2

Any other material factor that may 

impede the orderly resolution of the 

covered IDI separately from its parent 

and affiliates. 

Time frame for remediation. The plan 

should identify a time frame within 

which identified remediation efforts 

shall be achieved. 

Approval. The covered IDI’s board of 

directors or designated executive 

committee must approve the analysis 

and plan and attest that the plan is 

accurate and the information is current. 

No contingency resolution plan 

provided pursuant to this rule shall be 

binding on the FDIC as receiver for a 

covered IDI. 

II. Request for Comments 

The FDIC realizes that the proposed 

requirements for covered IDIs could not 

be implemented without some 

regulatory and financial burden on the 

industry. The FDIC is seeking to 

minimize the burden while carrying out 

its mandates as insurer and as receiver. 

The FDIC seeks comments on all aspects 

of the proposed rule. The FDIC seeks 

comment on the potential industry costs 

and feasibility of implementing the 

requirements of the proposed rule. The 

FDIC also is interested in comments on 

whether there are other ways to 

accomplish its goals, or other 

information that will further the 

objectives of this rulemaking. 

III. Paperwork Reduction Act 

In accordance with the Paperwork 

Reduction Act (44 U.S.C. 3501 et seq.) 

(‘‘PRA’’), the FDIC may not conduct or 

sponsor, and a person is not required to 

respond to, a collection of information 

unless it displays a currently valid 

Office of Management and Budget 

(OMB) control number. The estimated 

burden for the reporting and disclosure 

requirements, as set forth in the Notice 

of Proposed Rulemaking, is as follows: 

Title: Special Reporting, Analysis and 

Contingent Resolution Plans at Certain 

Large Insured Depository Institutions. 

OMB Number: 3064—New Collection. 

Affected Public: Insured depository 

institutions with greater than $10 billion 

in total assets that are owned or 

controlled by a parent company with 

more than $100 billion in total assets 

(‘‘covered IDIs’’). 

A. Estimated Number of Respondents 

for Initial Analysis, Information and 

Contingent Resolution Plan: 40. 

Frequency of Response: Once. 

Estimated Time per Response: 500 

hours per respondent. 

Estimated Total Initial Burden: 20,000 

hours. 

B. Estimated Number of Respondents 

for Annual Update on Analysis, 

Information and Contingent Resolution 

Plan: 40. 

Frequency of Response: Annual. 

Estimated Time per Response: 250 

hours per respondent. 

Estimated Total Burden: 10,000 

hours. 

C. Estimated Number of Respondents 

for Update on Certain Material 

Information Elements of Resolution 

Plan: 40. 

Frequency of Response: Zero to two 

times annually. 

Estimated Time per Response: 0 to 

250 hours per respondent. 

Estimated Total Burden: 0 to 20,000 

hours. 

Background/General Description of 

Collection: Section 360.10 contains 

collections of information pursuant to 

the PRA. In particular, the following 

requirements of this proposed rule 

constitute collections of information as 

defined by the PRA: All covered IDIs are 

required to submit to the FDIC a 

contingent resolution plan that contains 

certain required information and meets 

certain described standards within six 

months of the effective date of the 

proposed rule; updates to the analysis 

and plan are required to be submitted 

annually, with certain material 

information elements required to be 

updated more frequently as reasonable 

and necessary. The collections of 

information contained in this proposed 

rule are being submitted to OMB for 

review. 

Comments: In addition to the 

questions raised elsewhere in this 

Preamble, comment is solicited on: (1) 

Whether the proposed collection of 

information is necessary for the proper 

performance of the functions of the 

agency, including whether the 

information will have practical utility; 

(2) the accuracy of the agency’s estimate 

of the burden of the proposed collection 

of information, including the validity of 

the methodology and assumptions used; 

(3) ways to enhance the quality, utility, 

and clarity of the information to be 

collected; (4) ways to minimize the 

burden of the information collection on 

respondents, including through the use 

of automated collection techniques or 

other forms of information technology, 

e.g., permitting electronic submission of 

responses; and (5) estimates of capital or 

start-up costs and costs of operation, 

maintenance, and purchases of services 

to provide information. 

Addresses: Interested parties are 

invited to submit written comments to 

the FDIC concerning the PRA 

implications of this proposal. Such 

comments should refer to ‘‘Special 

Reporting, Analysis and Contingent 

Resolution Plans at Certain Large 

Insured Depository Institutions.’’ 

Comments may be submitted by any of 

the following methods: 

• Agency Web Site: http:// 

www.FDIC.gov/regulations/laws/federal. 

Follow instructions for submitting 

comments on the Agency Web Site. 

• E-mail: comments@FDIC.gov. 

Include ‘‘Special Reporting, Analysis 

and Contingent Resolution Plans at 

Certain Large Insured Depository 

Institutions’’ in the subject line of the 

message. 

• Mail: Gary A. Kuiper 

(202.898.3877), Counsel, Attention: 

Comments, FDIC, 550 17th St., NW., 

Room F–1072, Washington, DC 20429. 

• Hand Delivery/Courier: Comments 

may be hand-delivered to the guard 

station at the rear of the 550 17th Street 

Building (located on F Street), on 

business days between 7 a.m. and 5 p.m. 

(EST). 

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• A copy of the comments may also 

be submitted to the OMB desk officer for 

the FDIC, Office of Information and 

Regulatory Affairs, Office of 

Management and Budget, New 

Executive Office Building, Room 3208, 

Washington, DC 20503. 

Public Inspection: All comments 

received will be posted without change 

to http://www.fdic.gov/regulations/laws/ 

federal including any personal 

information provided. 

IV. Regulatory Flexibility Act 

The Regulatory Flexibility Act 

(‘‘RFA’’) requires an agency publishing a 

notice of proposed rulemaking to 

prepare and make available for public 

comment an initial regulatory flexibility 

analysis that describes the impact of the 

final rule on small entities. 5 U.S.C. 

603(a). Pursuant to regulations issued by 

the Small Business Administration (13 

CFR 121.201), a ‘‘small entity’’ includes 

a bank holding company, commercial 

bank, or savings association with assets 

of $165 million or less (collectively, 

small banking organizations). The RFA 

provides that an agency is not required 

to prepare and publish a regulatory 

flexibility analysis if the agency certifies 

that the proposed rule would not have 

a significant economic impact on a 

substantial number of small entities. 5 

U.S.C. 605(b). 

Pursuant to section 605(b) of the RFA 

(5 U.S.C. 605(b)), the FDIC certifies that 

this proposed rule would not have a 

significant economic impact on a 

substantial number of small entities. 

The proposed rule would require the 

largest insured depository institutions to 

submit and periodically update a 

contingent resolution plan. The 

proposed rule would apply only to 

covered IDIs—defined in the proposed 

rule as insured depository institutions 

with greater than $10 billion in total 

assets that are owned or controlled by 

parent companies with more than $100 

billion in total assets. There are no small 

banking organizations that would come 

within the definition of covered IDIs. 

List of Subjects in 12 CFR Part 360: 

Banks, Banking, Bank deposit 

insurance, Holding companies, National 

banks, Participations, Reporting and 

recordkeeping requirements, Savings 

associations, Securitizations. 

For the reasons stated above, the 

Board of Directors of the Federal 

Deposit Insurance Corporation proposes 

to amend Part 360 of title 12 of the Code 

of Federal Regulations as follows: 

PART 360—RESOLUTION AND 

RECEIVERSHIP RULES 

1. The authority citation for part 360 

is revised to read as follows: 

Authority: 12 U.S.C. 1817(b), 1818(a)(2), 

1818(t), 1819(a) Seventh, Ninth and Tenth, 

1820(b)(3), (4), 1821(d)(1), 1821(d)(10)(c), 

1821(d)(11), 1821(e)(1), 1821(e)(8)(D)(i), 

1823(c)(4), 1823(e)(2); Sec. 401(h), Pub. L 

101–73, 103 Stat. 357. 

2. Add new § 360.10 to read as 

follows: 

§ 360.10. Special reporting, analysis and 

contingent resolution plans at certain large 

insured depository institutions. 

(a) Purpose and scope. This section is 

intended to ensure that the FDIC has the 

information necessary to facilitate the 

orderly resolution by the FDIC of a large 

insured depository institution (defined 

as a ‘‘Covered Insured Depository 

Institution’’ or ‘‘CIDI’’), upon its failure, 

on a stand-alone basis, when the CIDI is 

part of a complex financial organization 

that includes a corporate parent and, in 

most cases, affiliates that are not 

depository institutions insured by the 

FDIC. It also is intended to permit the 

FDIC to fulfill its legal mandates as 

deposit insurer by facilitating 

assessment of insured depository 

institutions’ risk, and regarding the 

resolution of failed insured depository 

institutions, to provide liquidity to 

depositors promptly, enhance market 

discipline, ensure equitable treatment of 

depositors at different insured 

depository institutions, and reduce the 

FDIC’s costs by preserving the franchise 

value of a failed insured depository 

institution. 

(b) Definitions—(1) Affiliate has the 

same meaning given to such term in 

Section 3(w)(6) of the Federal Deposit 

Insurance Act, 12 U.S.C. 1813(w)(6). 

(2) Covered Insured Depository 

Institution (CIDI) means an insured 

depository institution with greater than 

$10 billion in total assets that is owned 

or controlled by a parent company with 

more than $100 billion in total 

consolidated assets. 

(3) Non-Covered Insured Depository 

Institution means an FDIC-insured 

depository institution that does not 

meet the definition of a CIDI. 

(4) Parent company means any 

company that controls, directly or 

indirectly, an insured depository 

institution. 

(5) Company has the same meaning 

given to such term in § 362.2(d) of the 

FDIC’s Regulations, 12 CFR 362.2(d). 

(6) Subsidiary has the same meaning 

given to such term in Section 3(w)(4) of 

the Federal Deposit Insurance Act, 12 

U.S.C. 1813(w)(4). 

(7) Total assets are defined in the 

instructions for the filing of Reports of 

Income and Condition and Thrift 

Financial Reports, as applicable to the 

insured depository institution for 

determining whether it qualifies as a 

CIDI. 

(c) Contingent Resolution Plans to be 

Submitted by CIDIs to FDIC—(1) 

General. (i) Every CIDI, beginning on the 

effective date of this section as set forth 

in paragraph (d) of this section, must 

submit to the FDIC, in a form and at a 

place to be prescribed, a contingent 

resolution plan containing at least the 

information described in this section, 

and meeting the standards described in 

this section. The contingent resolution 

plan is to address the CIDI’s ability to 

be resolved in an orderly fashion in the 

event of its receivership, the insolvency 

of the parent or key affiliates. The CIDI’s 

contingent resolution plan should 

discuss its ability to unwind or separate 

the CIDI from the conglomerate 

structure in a cost-effective and timely 

fashion. The plan should disclose 

material obstacles to an orderly 

resolution of the CIDI, inter-connections 

and inter-dependencies that hinder the 

timely and effective resolution of the 

CIDI, and include the remediation steps 

or mitigating responses necessary to 

eliminate or minimize such obstacles. 

The FDIC will review the plan in 

consultation with the primary Federal 

regulator of the CIDI and the parent 

company to determine whether the plan 

is workable and effective. FDIC may 

reject the plan and require its 

resubmission if it fails to contain the 

required information or otherwise fails 

to meet the standards prescribed in this 

section. 

(ii) In developing the contingent 

resolution plan, CIDIs should consider 

the institution’s size relative to its 

parent company structure, its 

interdependence with the national and 

international marketplaces, as well as 

how easily its financial company 

products or services can be substituted 

with the services of other organizations. 

(2) Use of existing documents; 

updating of analysis. The CIDI may 

incorporate or include specific 

references to current reports or publicly 

filed information. 

(3) Standards for Plan Content. The 

following set forth the minimum 

standards for the contingent resolution 

plan to be provided by CIDIs: 

(i) Provide detailed information, 

covering material risks, business lines, 

operations, activities and exposures of 

the CIDI and its subsidiaries necessary 

to develop an effective contingent 

resolution plan. 

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(ii) Set forth the institution’s analysis 

that identifies material impediments to 

an orderly resolution of the CIDI in the 

event of its insolvency, the insolvency 

of its parent or critical affiliates, and 

describing the remediation or mitigating 

steps that are or will be taken to 

eliminate or mitigate such impediments. 

(iii) Provide information to the FDIC 

to allow the isolation of the CIDI and 

allow for effective resolution strategy 

development and contingency planning 

for a period of severe financial distress, 

describing means of preserving 

franchise value, maximizing recovery to 

creditors, and minimizing systemic 

impacts on the financial system. 

(iv) The contingent resolution plan 

should be tailored to the size, 

complexity and risk profile of the 

institution, provide remediation steps 

that are feasible and capable of 

execution within a reasonable time 

frame, and set forth a time period within 

which remediation actions are to be 

concluded. 

(v) The analysis and plan must be 

approved by the institution’s Board of 

Directors or designated executive 

committee. 

(vi) The analysis and contingent 

resolution plan must be updated on a 

regular, at least, annual, basis, and 

demonstrate an ability to provide 

current and updated information on 

material elements described in 

paragraph (d)(1) of this section. 

(4) Minimum Components of the 

Required Contingent Resolution Plan. At 

a minimum the contingent resolution 

plan should include the following 

elements: 

(i) Summary of Analysis and 

Contingent Resolution Plan. Summarize 

the material impediments to an orderly 

resolution of the CIDI separate from its 

parent and affiliates and a description of 

specific, credible remedial or mitigating 

steps that are or would be taken to 

eliminate or minimize such 

impediments. For example, reliance 

upon affiliates to provide critical 

servicers can establish an impediment 

to transferring the assets, liabilities and 

operations to an acquiring institution or 

bridge bank. This gap may be 

remediated by the development of 

continuity provisions in relevant 

contracts or by establishing pre-arranged 

substitution for such services. 

(ii) Organizational Structure. Provide 

the IDI’s, parent company’s, and 

affiliates’ legal and functional 

structures, and identity of key personnel 

tasked with managing major 

components within the organization 

materially affecting the CIDI. 

(iii) Business Activities, Relationships 

and Counterparty Exposures. Identify 

and describe the business activities of 

the CIDI and its subsidiaries, along with 

an explanation of material interrelationships among the entities in the 

organizational structure (for example, 

identification of major counterparties 

(especially for financial contracts) and 

affiliates) that provide key services and 

support. Critical services that are 

provided by affiliates, such as servicing, 

human resources, information 

technology support and operations, 

human resources or personnel should be 

identified. This section should also 

provide an assessment of each material 

affiliate’s ability to function on a standalone basis. 

(iv) Capital Structure. Detail the 

CIDI’s capital structure, as well as that 

of its parent, each subsidiary, and key 

affiliates. Provide complete financial 

information in the form of audited 

financial statements presented along 

with line-item descriptions of the assets, 

liabilities, and equity comprising the 

balance sheets of the parent company as 

a consolidated entity as well as each 

CIDI. Describe corporate financing 

arrangements for the institution, its 

subsidiaries, parent and key affiliates. 

Identify funding, liquidity, refinancing 

and concentration risks associated with 

the various capital pools being utilized. 

Identify the key exposures to systemic 

risk and the availability of a substitute 

that would mitigate the effect of a 

systemic event. 

(v) Intra-Group Funding, 

Transactions, Accounts, Exposures and 

Concentrations. Relative to the CIDI, 

describe intra-group funding 

relationships, accounts, and exposures, 

including terms, purpose, and duration. 

These would include, for example, a 

description of intra-group financial 

exposures, claims or liens, lending or 

borrowing lines and relationships, 

guaranties, asset accounts, deposits, or 

derivatives transactions. Clearly identify 

the nature and extent to which the 

CIDI’s parent or affiliates are to serve as 

a source of funding to the CIDI, the 

terms of any contractual arrangements, 

the location of related assets, funds or 

deposits and the mechanisms by which 

funds can be down-streamed from the 

parent to the CIDI. 

(vi) Systemically Important Functions. 

Describe systemically important 

functions that the CIDI, its subsidiaries 

and affiliates provide, including the 

nature and extent of the institution’s 

involvement in payment systems, 

custodial or clearing operations, large 

sweep programs, and capital markets 

operations in which it plays a dominant 

role. Discuss critical vulnerabilities, 

estimated exposure and potential losses, 

and why certain attributes of the 

businesses detailed in previous sections 

could pose a systemic risk to the 

broader economy. 

(vii) Material Events. Describe events, 

e.g., acquisitions, sales, litigation, 

operational and fiscal challenges, that 

have had a material affect on the IDI and 

its relationship with its parent company 

or affiliates, since the last iteration of 

the analysis and plan. 

(viii) Cross-Border Elements. Discuss 

the nature and extent of the CIDI’s crossborder interrelationships and exposures; 

describe individual components of the 

group structure that are based or located 

outside the United States, including 

foreign branches, subsidiaries and 

offices. Provide detail on the location 

and amount of foreign deposits and 

assets. This information is necessary to 

facilitate the FDIC’s determination of 

the legal and policy framework under 

which such assets might be resolved in 

the event of insolvency, including the 

framework for providing liquidity, the 

terms and restrictions of government 

support, and the operational and 

technical challenges of international 

payment systems. 

(ix) Any other material factor that 

may impede the orderly resolution of 

the CIDI separately from its parent and 

affiliates. 

(x) Time frame. The plan should 

identify a time frame within which 

identified remediation efforts shall be 

achieved. 

(xi) Approval. The CIDI’s board of 

directors or designated executive 

committee must approve the analysis 

and plan and attest that the plan is 

accurate and that the information is 

current. 

(5) No limiting effect on FDIC as 

receiver. No contingency resolution plan 

provided pursuant to this rule shall be 

binding on the FDIC as receiver for a 

covered IDI. 

(d) Implementation requirements. (1) 

The gap analysis and plan must be 

submitted within 6 months of the 

effective date of the rule and must be 

updated annually. FDIC may extend 

these deadlines in individual cases for 

good cause shown. Material information 

elements must be updated as necessary 

given the risk profile and structure of 

the institution relative to its affiliates 

(e.g., deposit flows, intra-group funding 

flows, short-term funding, derivatives 

transactions, assets subject to market 

volatility; or material changes to capital 

structure or sources). 

(2) An insured depository institution 

not within the definition of a CIDI on 

the effective date of this section must 

comply with the requirements of this 

section no later than 6 months following 

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the end of the second calendar quarter 

for which it meets the criteria for a CIDI. 

(3) Upon the merger of two or more 

Non-CIDIs, if the resulting institution 

meets the criteria for a CIDI, that CIDI 

must comply with the requirements of 

this section no later than 6 months after 

the effective date of the merger. 

(4) Upon the merger of two or more 

CIDIs, the merged institution must 

comply with the requirements of this 

section within 6 months following the 

effective date of the merger. This 

provision, however, does not supplant 

any preexisting implementation date 

requirement, in place prior to the date 

of the merger, for the individual CIDI(s) 

involved in the merger. 

(5) Upon the merger of one or more 

CIDIs with one or more Non-CIDIs, the 

merged institution must comply with 

the requirements of this section within 

6 months following the effective date of 

the merger. This provision, however, 

does not supplant any preexisting 

implementation date requirement for 

the individual CIDI(s) involved in the 

merger. 

(6) Notwithstanding the general 

requirements of this paragraph (d), on a 

case-by-case basis, the FDIC may 

accelerate, upon notice, the 

implementation and updating time 

frames for all or part of the requirements 

of this section. 

(7) FDIC may, upon application of a 

CIDI and for good cause shown, modify 

or waive the minimum requirements set 

forth in this section for that institution. 

‘‘Good cause’’ shall mean that, because 

of the CIDI’s asset size, level of 

complexity, risk profile, scope of 

operations or other relevant 

characteristics, the FDIC is able to 

determine that the particular IDI does 

not, at the time of the application, 

appear to present material resolution 

challenges or other unusual risk to the 

Deposit Insurance Fund. Any such 

waiver or modification shall be effective 

for one year. 

(e) Confidentiality of Information 

Submitted Pursuant to this Section. 

Proprietary information and information 

which, if disclosed, could endanger the 

institution’s safety and soundness, 

should be identified and segregated to 

the extent possible, and be accompanied 

by a request for confidential treatment. 

Confidential information will not be 

disclosed except as required by law. 

Dated at Washington, DC, this 11th day of 

May 2010. 

By order of the Board of Directors. 

Robert E. Feldman, 

Executive Secretary, Federal Deposit 

Insurance Corporation. 

[FR Doc. 2010–11646 Filed 5–14–10; 8:45 am] 

BILLING CODE 6714–01–P 

FEDERAL DEPOSIT INSURANCE 

CORPORATION 

12 CFR Part 360 

RIN 3064–AD53 

Treatment by the Federal Deposit 

Insurance Corporation as Conservator 

or Receiver of Financial Assets 

Transferred by an Insured Depository 

Institution in Connection With a 

Securitization or Participation After 

September 30, 2010 

AGENCY: Federal Deposit Insurance 

Corporation (FDIC). 

ACTION: Notice of proposed rulemaking 

with request for comments. 

SUMMARY: The Federal Deposit 

Insurance Corporation (‘‘FDIC’’) 

proposes to adopt amendments to the 

rule regarding the treatment by the 

FDIC, as receiver or conservator of an 

insured depository institution, of 

financial assets transferred by the 

institution in connection with a 

securitization or a participation after 

September 30, 2010 (the ‘‘Proposed 

Rule’’). The Proposed Rule would 

continue the safe harbor for transferred 

financial assets in connection with 

securitizations in which the financial 

assets were transferred under the 

existing regulations. The Proposed Rule 

would clarify the conditions for a safe 

harbor for securitizations or 

participations issued after September 

30, 2010. The Proposed Rule also sets 

forth safe harbor protections for 

securitizations that do not comply with 

the new accounting standards for off 

balance sheet treatment by providing for 

expedited access to the financial assets 

that are securitized if they meet the 

conditions defined in the Proposed 

Rule. The conditions contained in the 

Proposed Rule would serve to protect 

the Deposit Insurance Fund (‘‘DIF’’) and 

the FDIC’s interests as deposit insurer 

and receiver by aligning the conditions 

for the safe harbor with better and more 

sustainable securitization practices by 

insured depository institutions (‘‘IDIs’’). 

The FDIC seeks comment on the 

regulations, the scope of the safe harbors 

provided, and the terms and scope of 

the conditions included in the Proposed 

Rule. 

DATES: Comments on this Notice of 

Proposed Rulemaking must be received 

by July 1, 2010. 

ADDRESSES: You may submit comments 

on the Proposed Rule, by any of the 

following methods: 

• Agency Web Site: http:// 

www.FDIC.gov/regulations/laws/ 

federal/notices.html. Follow 

instructions for submitting comments 

on the Agency Web Site. 

• E-mail: Comments@FDIC.gov. 

Include RIN 3064–AD53 on the subject 

line of the message. 

• Mail: Robert E. Feldman, Executive 

Secretary, Attention: Comments, Federal 

Deposit Insurance Corporation, 550 17th 

Street, NW., Washington, DC 20429. 

• Hand Delivery: Comments may be 

hand delivered to the guard station at 

the rear of the 550 17th Street Building 

(located on F Street) on business days 

between 7 a.m. and 5 p.m. 

Instructions: All comments received 

will be posted generally without change 

to http://www.fdic.gov/regulations/laws/ 

federal/propose.html, including any 

personal information provided. 

FOR FURTHER INFORMATION CONTACT: 

Michael Krimminger, Office of the 

Chairman, 202–898–8950; George 

Alexander, Division of Resolutions and 

Receiverships, (202) 898–3718; Robert 

Storch, Division of Supervision and 

Consumer Protection, (202) 898–8906; 

or R. Penfield Starke, Legal Division, 

(703) 562–2422, Federal Deposit 

Insurance Corporation, 550 17th Street, 

NW., Washington, DC 20429. 

SUPPLEMENTARY INFORMATION: 

I. Background 

In 2000, the FDIC clarified the scope 

of its statutory authority as conservator 

or receiver to disaffirm or repudiate 

contracts of an insured depository 

institution with respect to transfers of 

financial assets by an IDI in connection 

with a securitization or participation 

when it adopted a regulation codified at 

12 CFR 360.6 (the ‘‘Securitization 

Rule’’). This rule provided that the FDIC 

as conservator or receiver would not use 

its statutory authority to disaffirm or 

repudiate contracts to reclaim, recover, 

or recharacterize as property of the 

institution or the receivership any 

financial assets transferred by an IDI in 

connection with a securitization or in 

the form of a participation, provided 

that such transfer meets all conditions 

for sale accounting treatment under 

generally accepted accounting 

principles (‘‘GAAP’’). The rule was a 

clarification, rather than a limitation, of 

the repudiation power. Such power 

authorizes the conservator or receiver to 

breach a contract or lease entered into 

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