This section of the FEDERAL REGISTER

contains notices to the public of the proposed

issuance of rules and regulations. The

purpose of these notices is to give interested

persons an opportunity to participate in the

rule making prior to the adoption of the final

rules.

Proposed Rules Federal Register

64170 

Vol. 87, No. 204 

Monday, October 24, 2022 

FEDERAL RESERVE SYSTEM 

12 CFR Chapter II 

[Docket No. R–1786] 

RIN 7100–AG44 

FEDERAL DEPOSIT INSURANCE 

CORPORATION 

12 CFR Chapter III 

RIN 3064–AF86 

Resolution-Related Resource 

Requirements for Large Banking 

Organizations 

AGENCY: Board of Governors of the 

Federal Reserve System, Federal Deposit 

Insurance Corporation. 

ACTION: Advance notice of proposed 

rulemaking; request for comment. 

SUMMARY: The Board of Governors of the 

Federal Reserve System (Board) and 

Federal Deposit Insurance Corporation 

(FDIC) (together, the agencies) are 

publishing for public comment this 

advance notice of proposed rulemaking 

(ANPR) to solicit public input regarding 

whether an extra layer of loss-absorbing 

capacity could improve optionality in 

resolving a large banking organization or 

its insured depository institution, and 

the costs and benefits of such a 

requirement. This may, among other 

things, address financial stability by 

limiting contagion risk through the 

reduction in the likelihood of uninsured 

depositors suffering loss, and keep 

various resolution options open for the 

FDIC to resolve a firm in a way that 

minimizes the long term risk to 

financial stability and preserves 

optionality. The agencies are seeking 

comment on all aspects of the ANPR 

from all interested parties and also 

request commenters to identify other 

issues that the Board and FDIC should 

consider. 

DATES: Comments must be received on 

or before December 23, 2022. 

ADDRESSES: Interested parties are 

encouraged to submit written comments 

jointly to both agencies. Commenters are 

encouraged to use the title ‘‘ANPR 

Resolution-Related Resource 

Requirements for Large Banking 

Organizations’’ to facilitate the 

organization and distribution of 

comments between the agencies. 

Commenters are also encouraged to 

identify the number of the specific 

question for comment to which they are 

responding. Comments should be 

directed to: 

Board: You may submit comments, 

identified by Docket No. R–1786 and 

RIN 7100–AG44 by any of the following 

methods: 

• Agency Website: https://

www.federalreserve.gov. Follow the 

instructions for submitting comments at 

https://www.federalreserve.gov/ 

generalinfo/foia//ProposedRegs.cfm. 

• Email: regs.comments@

federalreserve.gov. Include docket and 

RIN numbers in the subject line of the 

message. 

• Fax: 202–452–3819 or 202–452– 

3102. 

• Mail: Ann E. Misback, Secretary, 

Board of Governors of the Federal 

Reserve System, 20th Street and 

Constitution Avenue NW, Washington, 

DC 20551. 

Public Inspection: All public 

comments are available from the Board’s 

website at https://

www.federalreserve.gov/generalinfo/ 

foia//ProposedRegs.cfm as submitted. 

Accordingly, comments will not be 

edited to remove any identifying or 

contact information. Public comments 

may also be viewed electronically or in 

paper in Room M–4365A, 2001 C Street 

NW, Washington, DC 20551, between 

9:00 a.m. and 5:00 p.m. during Federal 

business weekdays. For security 

reasons, the Board requires that visitors 

make an appointment to inspect 

comments. You may do so by calling 

(202) 452–3684. Upon arrival, visitors 

will be required to present valid 

government-issued photo identification 

and to submit to security screening in 

order to inspect and photocopy 

comments. For users of TTY–TRS, 

please call 711 from any telephone, 

anywhere in the United States. 

FDIC: You may submit comments, 

identified by RIN 3064–AF86, by any of 

the following methods: 

• Agency Website: https://

www.fdic.gov/resources/regulations/ 

federal-register-publications/. Follow 

instructions for submitting comments 

on the Agency website. 

• Email: comments@fdic.gov. Include 

RIN 3064–AF86 on the subject line of 

the message. 

• Mail: James P. Sheesley, Assistant 

Executive Secretary, Attention: 

Comments RIN 3064–AF86, Federal 

Deposit Insurance Corporation, 550 17th 

Street NW, Washington, DC 20429. 

• Hand Delivery/Courier: Comments 

may be hand delivered to the guard 

station at the rear of the 550 17th Street 

NW building (located on F Street NW) 

on business days between 7:00 a.m. and 

5:00 p.m. 

Public Inspection: Comments 

received, including any personal 

information provided, may be posted 

without change to https://www.fdic.gov/ 

resources/regulations/federal-registerpublications/. Commenters should 

submit only information that the 

commenter wishes to make available 

publicly. The FDIC may review, redact, 

or refrain from posting all or any portion 

of any comment that it may deem to be 

inappropriate for publication, such as 

irrelevant or obscene material. The FDIC 

may post only a single representative 

example of identical or substantially 

identical comments, and in such cases 

will generally identify the number of 

identical or substantially identical 

comments represented by the posted 

example. All comments that have been 

redacted, as well as those that have not 

been posted, that contain comments on 

the merits of this notice will be retained 

in the public comment file and will be 

considered as required under all 

applicable laws. All comments may be 

accessible under the Freedom of 

Information Act. 

FOR FURTHER INFORMATION CONTACT: 

Board: Molly Mahar, Senior Associate 

Director, (202) 973–7360; Catherine 

Tilford, Deputy Associate Director, (202) 

452–5240; Lesley Chao, Lead Financial 

Institution Policy Analyst, Policy 

Development, (202) 974–7063, Division 

of Supervision and Regulation; Charles 

Gray, Deputy General Counsel, (202) 

510–3484, Reena Sahni, Associate 

General Counsel, (202) 452–2026, Jay 

Schwarz, Assistant General Counsel, 

(202) 452–2970, Andrew Hartlage, 

Senior Counsel, (202) 452–6483, Legal 

Division, Board of Governors of the 

Federal Reserve System, 20th Street and 

Constitution Avenue NW, Washington, 

DC 20551. For users of TTY–TRS, please 


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1E.g., Regulation QQ, 12 CFR part 243 (joint 

resolution planning rule); Regulation YY, 12 CFR 

part 252 (Board’s enhanced prudential standards, 

including TLAC). 

2SR Letter 14–1, Heightened Supervisory 

Expectations for Recovery and Resolution 

Preparedness for Certain Large Bank Holding 

Companies—Supplemental Guidance on 

Consolidated Supervision Framework for Large 

Financial Institutions (SR Letter 12–17/CA Letter 

12–14) (January 24, 2014), https://

www.federalreserve.gov/supervisionreg/srletters/ 

sr1401.htm. 

3 12 CFR 360.10. 

4The term large banking organization refers to a 

domestic bank holding company, or domestic 

savings and loan holding company, that has $100 

billion or more in total consolidated assets but is 

not a GSIB under the Board’s capital rule, 12 CFR 

part 217, or a savings and loan holding company 

that would be identified as a GSIB under the 

Board’s capital rule if it were a bank holding 

company. The total population of large banking 

organizations corresponds to Category II through IV 

firms under the Board’s tiering framework for 

enhanced prudential standards. In this ANPR, the 

agencies are focused on domestic large banking 

organizations in Categories II and III, which 

generally exceed a threshold of $250 billion in total 

consolidated assets. 

5Category II banking organizations have $700 

billion or more in average total consolidated assets 

or $75 billion or more in cross-jurisdictional 

activity. Category III banking organizations have 

between $250 billion and $700 billion in average 

total consolidated assets or $75 billion or more in 

off-balance sheet exposures, nonbank assets, or 

short-term wholesale funding. 

6 In November 2019, the resolution plan rule was 

amended to modify plan submission requirements 

for firms that do not pose the same systemic risk 

as the largest institutions. The revised final rule 

established three types of resolution plans: the full 

plan, targeted plan, and reduced plan. Currently, 

U.S. GSIBs and Category II and III firms alternate 

between filing full and targeted plans. U.S. GSIBs 

alternate on a 2-year cycle while Category II and III 

firms alternate on a 3-year cycle. Category II and III 

firms last submitted targeted plans on December 17, 

2021; under the rule they will next be required to 

submit full resolution plans on or before July 1, 

2024. On September 30, 2022, the agencies issued 

a press release announcing their intention to issue 

forthcoming resolution planning guidance for 

Category II and III firms which have not already 

received guidance. 

7U.S. intermediate holding companies of global 

systemically important foreign banking 

organizations, however, are subject to internal 

TLAC and long-term debt requirements. See 12 CFR 

part 252, subpart P. 

8See FR Y–9C Schedule HC—Consolidated 

Balance Sheet, for Category II and III bank holding 

companies. 9See Call Report Schedule RC–O—Other Data for 

Deposit Insurance and FICO Assessments, for 

Category II and III banking organizations. 

call 711 from any telephone, anywhere 

in the United States. 

FDIC: Andrew J. Felton, Deputy 

Director, (202) 898–3691; Ryan P. 

Tetrick, Deputy Director, (202) 898– 

7028; Jenny G. Traille, Associate 

Director, (202) 898–3608; Julia E. Paris, 

Senior Cross-Border Specialist, (202) 

898–3821; Division of Complex 

Institution Supervision and Resolution; 

R. Penfield Starke, Assistant General 

Counsel, (202) 898–8501, rstarke@

fdic.gov; David N. Wall, Assistant 

General Counsel, (202) 898–6575, Legal 

Division, Federal Deposit Insurance 

Corporation, 550 17th Street NW, 

Washington, DC 20429. 

SUPPLEMENTARY INFORMATION: 

Background 

Over the past decade, the Board of 

Governors of the Federal Reserve 

System (Board) and Federal Deposit 

Insurance Corporation (FDIC) (together, 

the agencies) have promulgated rules 

and guidance, both jointly and 

individually, to support the orderly 

resolution of large banking 

organizations.1 These rules and related 

guidance are tiered based on the 

complexity and risks of different 

banking organizations: the most 

stringent rules apply only to global 

systemically important bank holding 

companies (GSIBs) and include 

requirements to submit a resolution 

plan every two years, follow a ‘‘cleanholding company’’ requirement that 

prohibits top-tier holding companies 

from entering certain financial 

arrangements (such as short-term 

borrowings or derivatives contracts) that 

might impede orderly resolution, adopt 

resolution-related stay provisions in 

qualified financial contracts (for 

example, establishing a set period of 

time during which a party to a qualified 

financial contract is restricted from 

terminating, liquidating, or netting such 

contract in the event of resolution), and 

maintain minimum outstanding 

amounts of total loss-absorbing capacity 

(TLAC) and long-term debt. The Board 

has issued supervisory guidance 2 on 

recovery planning that applies to GSIBs, 

and the FDIC has issued a rule to 

require certain covered insured 

depository institutions (CIDIs), 

including IDI subsidiaries of GSIBs, to 

periodically submit resolution plans to 

ensure that the FDIC can effectively 

carry out its responsibilities for the 

resolution of a CIDI in the event that it 

is appointed receiver under the Federal 

Deposit Insurance Act (FDI Act).3

For large banking organizations that 

are not U.S. GSIBs,4 resolution planning 

requirements under Title I of the DoddFrank Wall Street Reform and Consumer 

Protection Act apply at a reduced 

frequency. Category II and Category III 5

large banking organizations file 

resolution plans on a triennial cycle,6

alternating between submission of full 

and targeted resolution plans. Further, 

large banking organizations that are not 

GSIBs generally are not subject to TLAC 

or long-term debt requirements, clean 

holding company requirements, rules 

related to qualified financial contract 

stay provisions in resolution, or Board 

guidance on recovery planning.7

Since resolution-related rules and 

guidance were adopted, the U.S. 

banking system has continued to evolve. 

For example, in recent years, merger 

activity and organic growth have 

increased the size of large banking 

organizations that are not GSIBs, 

particularly those in Category III. As of 

December 2019, the domestic Category 

III firms had an average of 

approximately $413 billion in total 

consolidated assets, while as of 

December 2021, the same group of large 

banking organizations had grown to an 

average size of approximately $554 

billion in total consolidated assets.8

While most of these firms’ overall 

business remains concentrated in 

traditional banking activities, and their 

proportion of total banking sector assets 

has remained relatively constant, their 

larger size heightens the potential 

impact of a possible costly resolution. 

For the vast majority of bank 

resolutions, the FDIC pursues a strategy 

of selling the failed IDI to another 

depository institution, as this has been 

the course of action which was leastcostly to the Deposit Insurance Fund 

(DIF) and minimized disruption to local 

communities and to the financial 

system. During the global financial 

crisis, there were limited and 

undesirable options available to the 

FDIC for resolving the largest failed IDIs 

including disruptive and costly 

liquidation strategies or the sale of large 

banks to even larger financial 

institutions. The challenges associated 

with the acquisition of a large, failed IDI 

continue to be significant, both 

operationally and financially; as a 

result, the universe of potential 

acquirers is limited. The availability of 

sufficient loss-absorbing resources at the 

depository institution would preserve 

franchise value and support the 

stabilization of the firm to allow for a 

range of options for the restructuring 

and disposition of the reduced firm in 

whole or in parts. 

In addition, some large banking 

organizations have increased their 

reliance on large uninsured deposits to 

fund their operations over the past 

decade. These deposits may be less 

stable relative to insured deposits under 

conditions of firm-specific stress and 

resolution. Uninsured deposits 

comprise a significant portion of 

Category II and III banking 

organizations’ funding base, standing at 

roughly 40% of total deposits as of the 

first quarter of 2022 as a group.9 While 

GSIBs also have high levels of 

uninsured deposits, the regulatory 

resolution framework that has been built 


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10See 82 FR 8266, 8270 n.29 (January 24, 2017). 

up around them—including TLAC and 

long-term debt requirements—help to 

mitigate related risks. 

Finally, some large banking 

organizations have heightened crossjurisdictional activity or significant nonbank operations that could present 

challenges to orderly resolution due to 

the complexities of coordinating among 

resolution authorities. While size alone 

can limit options and increase the 

potential negative impacts in the 

resolution of an IDI, other complexities 

can create risks from and impediments 

to resolution, including significant 

international operations requiring crossborder cooperation, and material 

operations, assets, liabilities and 

services outside the bank chain. These 

complicating features of bank resolution 

can raise challenges to the feasibility of 

creating and stabilizing a viable bridge 

depository institution or other 

resolution strategies for a failing insured 

depository institution due to multiple 

competing insolvencies, discontinuity 

of operations, and the destruction of 

value, and result in a disorderly and 

costly resolution. 

As the profile of large banking 

organizations continues to evolve, with 

larger balance sheets and increased 

volume of uninsured deposits, and 

potentially more complex organizations, 

the agencies are considering whether 

additional measures are warranted to 

address financial stability impacts that 

might be associated with the failure of 

such firms. This includes whether an 

extra layer of loss-absorbing capacity 

could increase the FDIC’s optionality in 

resolving the insured depository 

institution, and the potential costs of 

such a requirement. Additional lossabsorbing resources could limit 

contagion risk by reducing the 

likelihood of uninsured depositors 

suffering loss. These additional 

resources could also be useful in 

keeping various resolution options open 

for the FDIC to resolve a subsidiary 

depository institution in a way that 

minimizes the long term risk to 

financial stability; availability of such 

resources could help preserve 

optionality for resolving large IDIs 

across a range of scenarios in a manner 

that is least costly to the DIF without 

resorting to the sale of the firm being 

resolved to another large banking 

organization or GSIB. However, a longterm debt requirement could impact the 

cost and availability of credit. 

GSIB vs. Large Banking Organization 

Resolution 

GSIB and other large banking 

organization resolution strategies tend 

to follow one of two generally 

recognized approaches to resolution.10

As described in the public sections of 

their resolution plans, the U.S. GSIBs 

have all adopted a single-point-of-entry 

(SPOE) resolution strategy, in which 

only the top-tier holding company 

would enter a resolution proceeding 

(bankruptcy) and in which losses would 

be passed up from subsidiaries to the 

parent company shareholders and longterm debt holders to recapitalize the 

subsidiaries. To facilitate this resolution 

strategy, the total loss-absorbing 

capacity (TLAC) rule requires a GSIB to 

maintain a minimum level of eligible 

long-term debt at the holding company 

level. Proceeds from issuance of longterm debt may be down-streamed to 

subsidiaries, such as in the form of 

internal debt, or maintained at the 

holding company to allocate as resource 

needs arise at particular subsidiaries. 

Prior to resolution, the top-tier holding 

company would down-stream all 

remaining available resources. Upon 

exhaustion of the remaining holding 

company resources it would enter 

resolution while the subsidiaries 

continue operating. 

By allowing subsidiaries to continue 

operating after the resolution of the toptier holding company, the SPOE 

resolution process limits the risk of 

multiple competing resolution processes 

across multiple resolution authorities 

and jurisdictions that could greatly 

complicate the resolution of a failing 

firm and impede the continuity of 

critical operations. An SPOE resolution 

also avoids losses to subsidiaries’ thirdparty creditors and may reduce the need 

for asset fire sales that could pose 

broader risks to financial stability. The 

TLAC, long-term debt, and clean 

holding company requirements that the 

Board has applied to the U.S. GSIBs 

were generally designed to support an 

SPOE resolution strategy. These GSIB 

requirements enable loss-absorbing 

resources issued at the holding 

company level to be down-streamed to 

subsidiaries in a pre-positioned fashion, 

as well as to be made available on a 

flexible incremental basis where called 

for under stress. 

Unlike the GSIBs, most large banking 

organizations do not have material 

broker dealers or international 

operations, and their assets and 

liabilities most often are 

overwhelmingly concentrated in the 

depository institution entity. Some have 

significant international footprints or 

significant activities, assets, and 

services outside the bank chain, but 

have less complex operations and fewer 

systemically important critical 

operations. As described in the public 

sections of the resolution plans filed by 

Category II and III large banking 

organizations, a multiple-point-of-entry 

(MPOE) resolution strategy is generally 

contemplated by these firms, in which 

the parent holding company would 

enter bankruptcy and the insured 

depository institution subsidiary would 

undergo FDIC-led resolution under the 

Federal Deposit Insurance Act (FDI Act). 

In conducting the insured depository 

institution-level resolution, the FDIC 

can, among other things, provide 

liquidity when necessary and take 

advantage of the statutory stays on 

derivatives and other qualified financial 

contracts, as well as its own historical 

experience in administering insured 

depository institution-level resolutions. 

Drawing on that experience, the FDIC 

has several options for carrying out the 

resolution of an insured depository 

institution, including selling assets and 

transferring deposits to healthy 

acquirers, transferring assets and 

deposits to a bridge bank (which, among 

other things, could either sell off assets 

over time or conduct a sale or an IPO 

once the restructured business has 

stabilized), or executing an insured 

deposit payout. In deciding which 

option to pursue, the FDIC must show 

how it would meet the least-cost test set 

forth in the FDI Act in furtherance of its 

key objective of protecting insured 

depositors. While the FDI Act does 

contain a systemic risk exception to the 

least-cost test, the FDIC had never 

invoked the exception prior to the 

global financial crisis. While an MPOE 

resolution strategy may be appropriate 

for a large banking organization, without 

sufficient loss absorbing resources at the 

insured depository institution, the 

options available to the FDIC for 

resolving the subsidiary insured 

depository institution under the FDI Act 

may be limited. The size and funding 

profile of large banking organizations 

merits consideration of whether a larger 

set of options, supported by additional 

resources at the insured depository 

institution is needed to contain the 

impact of their failure on the larger 

financial system immediately and over 

time, and the potential costs of such an 

approach. Particularly for the largest 

and most complex large banking 

organizations, the availability of ex ante 

loss-absorbing capacity could be helpful 

in a range of resolution scenarios, 

including a bail-in recapitalization or a 

bridge bank, that would afford the FDIC 

the ability to stabilize operations, 

preserve franchise value, and provide 

more time to consider the impact on 


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11Such characteristics would necessarily include 

an appropriate form of subordination. As described 

in the adopting release for the TLAC rule, debt 

issued by a parent holding company is considered 

structurally subordinated to debt of the parent’s 

insured depository institution subsidiary. Debt 

issued by an insured depository institution 

subsidiary, either externally or internally, would 

generally need to benefit from contractual or 

statutory subordination features in order to reliably 

serve as loss-absorbing capacity in resolution. 

future financial stability of marketing a 

failed institution in whole or in parts. 

Public Input 

The agencies periodically review their 

existing regulations to ensure they 

appropriately address risks to safe and 

sound banking and financial stability 

and are issuing this ANPR to explore 

whether and how resolution-related 

standards applicable to large banking 

organizations could be strengthened to 

enable a more efficient resolution of a 

large banking organization, while 

mitigating effects to the financial 

system. The agencies are considering 

tiered requirements that distinguish 

between the set of standards in this area 

that are applied to GSIBs and the 

framework to be applied to other large 

banking organizations, given differences 

between their resolution strategies as 

well as large banking organizations’ 

smaller size, less complex operations, 

and generally more limited operations 

outside of their U.S. insured depository 

institution. The agencies are interested 

in public comment on how 

appropriately-adapted elements of the 

GSIB resolution-related standards— 

including a long-term debt requirement 

potentially at the insured depository 

institution and/or the holding company 

level, a clean holding company 

requirement, or recovery planning 

guidance—could be applied to large 

banking organizations to enhance 

financial stability by providing for a 

wider range of resolution options and 

address related risks to safe and sound 

banking, the potential costs of such 

changes, and how these policies might 

be structured to achieve those goals 

most effectively and efficiently. 

Long-Term Debt 

The agencies are exploring whether 

requiring additional ex ante financial 

resources, such as qualifying forms of 

long-term debt, including at the insured 

depository institution, would improve 

the prospects for successful resolution 

of large banking organizations, the 

potential costs and the appropriate 

scope of any such requirement. The 

Board’s current long-term debt 

requirements were designed to ensure 

that U.S. GSIBs maintain greater lossabsorbing capacity on a ‘‘gone-concern’’ 

basis in resolution and have resources 

available to recapitalize subsidiaries and 

maintain continuous operations even as 

the parent enters bankruptcy (as is the 

case in an SPOE resolution). Although 

some portion of going-concern 

regulatory capital might in certain 

circumstances remain available to 

absorb losses after a firm has entered 

resolution, a long-term debt requirement 

would address the fact that the firm’s 

regulatory capital, and especially its 

equity capital, is highly likely to have 

been significantly or completely 

depleted in the lead-up to a resolution 

or bankruptcy. 

While the current long-term debt 

requirement applicable to U.S. GSIBs 

was designed with the SPOE resolution 

strategies followed by the U.S. GSIBs in 

mind, it is possible that for other large 

banking organizations an appropriately 

adapted form of long-term debt 

requirement is needed to preserve 

options for an FDIC-led resolution of an 

insured depository institution as part of 

an MPOE resolution process. For 

example, if the proceeds of long-term 

debt issued by a parent holding 

company are down-streamed to its 

principal insured depository institution 

subsidiary in exchange for internal longterm debt of the insured depository 

institution, such internal debt could be 

available to absorb losses in connection 

with an FDIC resolution of the insured 

depository institution. Alternatively, or 

in conjunction with, such internal debt 

funded by parent-level issuance, 

external long-term debt issued by the 

insured depository institution could 

likewise function as a credible form of 

loss absorbency in an FDIC-led 

resolution and might therefore 

appropriately count toward an overall 

long-term debt requirement. In concept, 

issuance of long-term debt at the parent 

holding company level might play an 

additional role of supporting an SPOE 

strategy focused on holding companylevel resolution, potentially creating an 

additional resolution option. 

The availability of this loss-absorbing 

resource at the insured depository 

institution would protect deposits and 

thereby increase the likelihood that a 

transfer to a bridge insured depository 

institution to preserve franchise value 

would be less costly to the DIF than a 

payout of insured deposits. Use of a 

bridge insured depository institution 

would enhance the FDIC’s ability to 

pursue options that could involve 

breaking the insured depository 

institution up for sale to multiple 

acquirers, and/or spinning off some 

remaining streamlined operations as a 

restructured entity with ongoing 

viability, depending on which strategy 

is most desirable. Generally speaking, 

the greater the extent of feasible options 

available to the FDIC as it undertakes 

resolution of an insured depository 

institution, the greater will be the 

chance that resolution can be conducted 

in an orderly manner without the need 

of extraordinary support and increased 

risk to the DIF based upon a systemic 

risk exception to the least-cost test. 

Thus, to limit the impact of a firm’s 

failure on the DIF and decrease 

potential risks to financial stability, 

certain large banking organizations 

could be required to maintain long-term 

debt at the insured depository 

institution that meets certain specified 

characteristics 11 in order to (i) absorb 

losses at a large banking organization as 

it undergoes resolution; (ii) support the 

viability of restructuring options such as 

the sale of various subsidiaries, branch 

networks, or business lines; or (iii) 

support a public spin-off of the 

restructured entity upon its emergence 

from resolution. 

For these reasons, the agencies are 

considering the advantages and 

disadvantages of requiring large banking 

organizations that meet some specified 

categorization threshold to maintain 

long-term debt capable of absorbing 

losses in resolution. 

Question 1: The agencies invite 

comment on whether and how a 

requirement to maintain a minimum 

amount of long-term debt could 

enhance a large banking organization’s 

resolvability. How might long-term debt 

be beneficial for improving optionality 

when conducting the resolution of a 

U.S. large banking organization or its 

insured depository institution? What 

would be the optimal structure of the 

long-term debt and what other 

requirements would be necessary to 

ensure that it remains available to 

utilize in resolution? Which entity in a 

large banking organization’s corporate 

structure would be the ideal issuer of 

long-term debt externally to the market? 

What would be the costs of a long-term 

debt requirement for large banking 

organizations or their customers? What 

alternative approaches are available to 

address possible concerns about the 

resolvability of large banking 

organizations or their insured 

depository institutions? 

Question 2: The agencies invite 

comment on alternative approaches for 

determining the appropriate scope of 

application of a potential long-term debt 

requirement to the population of large 

banking organizations. In particular, 

what criteria would be relevant to 

determine whether a large banking 

organization should be subject to the 

requirement? Should all Category II and, 


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12 12 CFR 252.153(a). 13See 12 CFR 252.61—Eligible debt security. 

14 In their resolution planning, U.S. GSIBs and 

U.S. intermediate holding companies of foreign 

GSIBs determine what portion of those resources 

are pre-positioned at various material entities, 

including the insured depository institution, based 

upon their individual methodologies. 

Category III firms (including SLHCs, 

which are not subject to resolution 

planning requirements) be subject to a 

long-term debt requirement? Why or 

why not? What additional factors—for 

example, the presence of significant 

non-bank operations, critical 

operations, critical services outside the 

bank chain, cross-border operations, or 

extent of reliance on uninsured 

deposits—should the agencies consider 

when determining the scope of 

application of any long-term debt 

requirement to large banking 

organizations? Given the practical and 

market limitations for selling large 

insured depository institutions, 

especially during a crisis, what is the 

appropriate scope of application for a 

loss absorbing debt requirement to 

expand the range of strategies available 

to the FDIC? How should IDIs that are 

not part of a group under a BHC be 

considered? 

Question 3: The agencies invite 

comment on how any new requirements 

should be applied to the U.S. 

subsidiaries of foreign banking 

organizations. Top-tier U.S. 

intermediate holding company (IHC) 12

subsidiaries of foreign GSIBs are 

currently subject to long-term debt 

requirements. To what extent should 

those top-tier U.S. holding companies of 

foreign firms or their insured depository 

institutions that have a similar risk 

profile to the domestic large banking 

organizations that might be subject to 

any long-term debt requirement 

considered in this ANPR, be subject to 

any new requirements in line with those 

applied to domestic large banking 

organizations? 

Question 4: The agencies invite 

comment on the appropriateness of 

recognizing debt issued by various legal 

entities within a holding company 

structure in determining compliance 

with any long-term debt requirement 

imposed on the top tier holding 

company. Specifically, to what extent 

should the Board consider whether a 

large banking organization’s resolution 

strategy is an SPOE or MPOE strategy, 

whether the long-term debt is issued by 

the parent holding company or the 

insured depository institution, or other 

factors in determining the requirement? 

The current long-term debt calibration 

for U.S. GSIBs requires that firms 

maintain long-term debt at least equal to 

the greater of (i) 6% of risk-weighted 

assets, plus a firm-specific surcharge 

applicable to each GSIB or (ii) 4.5% of 

total leverage exposure. This calibration 

is intended to ensure U.S. GSIBs 

maintain enough loss-absorbing 

capacity to fully recapitalize material 

subsidiaries quickly for continuous 

operation. The current long-term debt 

requirement for intermediate holding 

companies of foreign GSIBs is calibrated 

at the greater of 6% of risk-weighted 

assets or 2.5% of total leverage 

exposure. 

Question 5: The agencies invite 

comment on the appropriate calibration 

of a long-term debt requirement for large 

banking organizations. Should the 

agencies establish the same calibration 

as is currently in effect for intermediate 

holding companies of foreign GSIBs or 

establish a different calibration? What 

are the advantages and disadvantages of 

applying a calibration designed to 

require sufficient resources to 

recapitalize a large banking 

organization’s subsidiaries in the event 

equity capital is fully depleted, in order 

to continue operations either under an 

SPOE or MPOE resolution strategy? How 

should the agencies weigh the burden of 

additional requirements against the 

potential benefit to financial stability? 

What other factors should the agencies 

consider to calibrate a long-term debt 

requirement for large banking 

organizations or insured depository 

institutions that would provide 

sufficient optionality to address 

material distress or failure in a manner 

that limits risk to financial stability over 

time? How should the agencies consider 

competitive equality in calibrating any 

long-term debt requirements for large 

banking organizations relative to 

existing requirements for GSIBs and top 

tier IHC holding companies of foreign 

banking organizations? What data 

should be considered to support 

calibration determinations? 

Question 6: The agencies invite 

comment on the potential effect of a 

long-term debt requirement on large 

banking organizations in different 

tiering categories (for example, Category 

II and Category III) and on the capacity 

of these firms to issue such debt into the 

market throughout an economic cycle. 

What are the potential effects of a longterm debt requirement on these firms’ 

funding model and funding costs, 

including any associated effect on 

market discipline and overall firm 

resiliency? What, if any, are the 

potential effects of a long-term debt 

requirement on the cost and availability 

of credit? 

Under the TLAC rule applicable to 

GSIBs, only debt instruments that meet 

certain requirements 13 may be included 

in a GSIB’s outstanding external TLAC 

amount. The general purpose of these 

requirements, certain of which are 

discussed below, is to ensure the ability 

of eligible long-term debt instruments to 

readily absorb losses in an SPOE 

resolution. The agencies are evaluating 

whether certain components of the 

eligibility requirements that must be 

satisfied for long-term debt to qualify as 

‘‘eligible long-term debt’’ under the 

existing TLAC rule that applies to U.S. 

GSIBs would be relevant to improve the 

resolvability of large banking 

organizations. These components and 

their applications to GSIBs are listed 

below: 

1. Issuance by the Top-Tier Holding 

Company 

To ensure that a debt instrument can 

be used to absorb losses incurred 

anywhere in the banking organization, 

the GSIB TLAC rule specifies that 

eligible long-term debt must be issued 

by the top-tier holding company of a 

banking organization.14 Debt externally 

issued by a subsidiary generally is only 

available to absorb losses in a resolution 

of that particular subsidiary. 

2. Clean Holding Company 

Requirements 

In addition, the top-tier holding 

companies of the GSIBs are also subject 

to specified ‘‘clean holding company’’ 

requirements. These requirements 

include prohibitions on issuance of 

short-term debt to external investors and 

on entry into derivatives and certain 

other types of financial contracts and 

arrangements that would create 

obstacles to an orderly resolution. 

The agencies are interested in 

whether these holding company 

requirements can or should be adapted 

to support the resolution of large 

banking organizations and how to create 

a layer of gone-concern loss-absorbing 

capacity that can most effectively be 

used to absorb losses in various 

scenarios. 

In addition, the agencies are 

interested in whether any of the 

eligibility requirements to be treated as 

‘‘eligible long-term debt’’ under the 

existing TLAC rule can or should be 

adapted to support the resolution of 

large banking organizations. 

Question 7: The Board invites 

comment on the pros and cons of 

permitting eligible long-term debt issued 

externally by a large banking 

organization’s principal insured 

depository institution subsidiary to 

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Federal Register / Vol. 87, No. 204 / Monday, October 24, 2022 / Proposed Rules 64175 

tier holding company. In what situations 

might requiring issuance at the holding 

company level be most beneficial? What 

range of approaches—other than 

requiring issuance by the top-tier 

holding company—may be available to 

ensure that eligible long-term debt will 

be available to absorb losses incurred at 

appropriate legal entities within a given 

large banking organization’s corporate 

group? 

Question 8: The agencies invite 

comment on whether requirements on 

governance mechanics should be put in 

place to ensure that entry into 

resolution will occur at a time when the 

eligible long-term debt will be available 

at the insured depository institution 

and/or the holding company level to 

absorb losses? Should such 

requirements include whether the loss 

absorbing capacity can absorb losses 

incurred at appropriate legal entities 

within a given large banking 

organization’s corporate group? To what 

extent should such mechanics be 

aligned with internal recovery planning 

frameworks to coordinate resolution 

preparation actions with recovery 

actions? 

Question 9: The agencies invite 

comment on whether subjecting the 

operations of the top-tier holding 

company of large banking organizations 

to ‘‘clean holding company’’ limitations 

similar to the ones imposed on GSIBs 

would further enhance the resolvability 

of a large banking organization. Why or 

why not? 

Question 10: Among the other 

requirements that must be satisfied 

under the existing GSIB TLAC rule in 

order for debt issued by the parent 

company to qualify as eligible long-term 

debt (for example, relating to ‘‘plain 

vanilla’’ characteristics, minimum 

remaining maturity, governing law), 

which requirements would remain 

essential in order for long-term debt 

instruments issued by large banking 

organizations to properly function as a 

loss-absorbing resource in resolution? 

What modifications of such 

requirements, if any, should the 

agencies consider in the large banking 

organization context with respect to loss 

absorbing debt at insured depository 

institutions and/or holding companies? 

Disclosure 

Under the TLAC rule applicable to 

GSIBs, firms are required to provide the 

LTD debtholders a description of the 

financial consequences that could occur 

if the GSIB entered into a resolution 

proceeding as well as a summary table 

of the location of the disclosures (e.g., 

on the GSIB’s website, in public 

financial reports or public regulatory 

reports). Where it is necessary to bail-in 

the LTD, the value of the debtholder’s 

note may be significantly or completely 

depleted. 

Question 11: The agencies invite 

comment on the appropriate form and 

content of the disclosure large banking 

organizations should be required to 

provide to their long-term debt investors 

with respect to the potential treatment 

of such debt in resolution. If LTD 

requirements are imposed on large 

banking organizations, what, if any, 

adaptations should be made relative to 

the disclosure requirements that apply 

to GSIBs? 

Separability 

The agencies are also evaluating 

whether they should, for some or all 

large banking organizations, establish 

separability requirements in the 

recovery or resolution contexts. 

When a large banking organization 

encounters internal or external stresses 

or ultimately enters resolution the 

identification of executable 

‘‘separability options,’’ such as the sale, 

transfer, or disposal of significant assets, 

portfolios, legal entities or business 

lines on a discrete product line or 

regional basis could provide alternatives 

to a wholesale acquisition of a large 

banking organization’s operations by a 

larger institution such as an existing 

GSIB. 

Question 12: Should the agencies 

impose any separability requirements 

for recovery or resolution on all large 

banking organizations, including GSIBs? 

To what extent would imposing new 

separability requirements add net 

benefits against the backdrop of other 

existing requirements? In what fashion 

can or should these requirements be 

harmonized to promote their 

effectiveness? 

By order of the Board of Governors of the 

Federal Reserve System. 

Michele Taylor Fennell, 

Deputy Associate Secretary of the Board. 

Federal Deposit Insurance Corporation. 

By order of the Board of Directors. 

Dated at Washington, DC, on October 18, 

2022. 

James P. Sheesley, 

Assistant Executive Secretary. 

[FR Doc. 2022–23003 Filed 10–21–22; 8:45 am] 

BILLING CODE 6210–01–P 

DEPARTMENT OF TRANSPORTATION 

Federal Aviation Administration 

14 CFR Part 39 

[Docket No. FAA–2022–1302; Project 

Identifier MCAI–2022–00062–E] 

RIN 2120–AA64 

Airworthiness Directives; GE Aviation 

Czech s.r.o. (Type Certificate 

Previously Held by WALTER Engines 

a.s., Walter a.s., and MOTORLET a.s.) 

Turboprop Engines 

AGENCY: Federal Aviation 

Administration (FAA), DOT. 

ACTION: Notice of proposed rulemaking 

(NPRM). 

SUMMARY: The FAA proposes to adopt a 

new airworthiness directive (AD) for all 

GE Aviation Czech s.r.o. (GEAC) H75– 

100, H75–200, H80, H80–100, H80–200, 

H85–100, and H85–200 model 

turboprop engines. This proposed AD 

was prompted by the manufacturer 

revising the airworthiness limitations 

section (ALS) of the existing engine 

maintenance manual (EMM) to 

introduce updated coefficients for the 

calculation of the cyclic life and safe life 

for the main shaft. This proposed AD 

would require revising the ALS of the 

existing EMM and the operator’s 

existing approved maintenance or 

inspection program, as applicable, to 

incorporate the updated coefficients and 

recalculate the cycles accumulated on 

critical parts. The FAA is proposing this 

AD to address the unsafe condition on 

these products. 

DATES: The FAA must receive comments 

on this NPRM by December 8, 2022. 

ADDRESSES: You may send comments, 

using the procedures found in 14 CFR 

11.43 and 11.45, by any of the following 

methods: 

• Federal eRulemaking Portal: Go to 

regulations.gov. Follow the instructions 

for submitting comments. 

• Fax: (202) 493–2251. 

• Mail: U.S. Department of 

Transportation, Docket Operations, M– 

30, West Building Ground Floor, Room 

W12–140, 1200 New Jersey Avenue SE, 

Washington, DC 20590. 

• Hand Delivery: Deliver to Mail 

address above between 9 a.m. and 5 

p.m., Monday through Friday, except 

Federal holidays. 

AD Docket: You may examine the AD 

docket at regulations.gov under Docket 

No. FAA–2022–1302; or in person at 

Docket Operations between 9 a.m. and 

5 p.m., Monday through Friday, except 

Federal holidays. The AD docket 

contains this NPRM, the mandatory 


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