FDIC releases report on how it would conduct resolution of a GSIB organization

The Federal Deposit Insurance Corporation (FDIC) issued a report this week that examines how it would manage the orderly resolution of a large, complex financial company.

The report explains how the FDIC would use authorities under Title II of the Dodd-Frank Act, with a particular focus on how it expects to resolve U.S.-headquartered Global Systemically Important Banking Organizations (GSIBs). It also provides background of resolution-related authorities in the Dodd-Frank Act and highlights key measures that facilitate preparation and implementation of resolution under Title II authority,

In addition, the report reviews strategic decision-making for the use of Title II authority and explains how the FDIC expects to carry out a Title II resolution of a U.S. GSIB using a Single Point of Entry resolution strategy.

“The ability of the FDIC and other regulatory authorities to manage the orderly resolution of large, complex financial institutions remains foundational to U.S. financial stability,” FDIC Chairman Martin Gruenberg said. “An orderly resolution is far preferable to the alternatives, particularly resorting to taxpayer support to prop up a failed institution or to bailing out investors and creditors. With this paper we are reaffirming that, should the need arise, the FDIC is prepared to apply the resolution framework that the FDIC and many other regulatory authorities in the U.S. and around the world have worked so hard to develop.”

Gruenberg presented the report recently to Peterson Institute for International Economics in Washington, DC.

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