The Federal Reserve Board issued final guidance this week to help certain large banks further develop their resolution plans.
The final guidance, developed jointly with the Federal Deposit Insurance Corporation, is mostly similar to the proposed guidance from August 2023. However, it incorporates changes in response to comments received.
Resolution plans, also known as living wills, describe a bank’s strategy for orderly resolution under bankruptcy in the event of material financial distress or failure.
The final guidance generally applies to domestic and foreign banks with more than $250 billion in total assets but that are not the largest and most complex banks. For the largest and most complex banks, guidance is already in place.
The guidance addresses the specific characteristics of, and risks posed by, this group of banks, and is organized around key areas of potential vulnerability. Those areas include capital, liquidity, and operational capabilities that could be needed in resolution.
Distinct from the guidance to the largest and most complex banks, this guidance provides expectations for both single point of entry and multiple point of entry resolution strategies. Further, it recognizes that the preferred resolution outcome for foreign banks is often a successful home country-led resolution and guides foreign banks on how to address the global resolution plan in their U.S. plan.
The agencies also announced that they are extending the resolution plan submission deadline to Oct. 1, 2025, from the previous deadline of March 31, 2025. The extension will provide reasonable time for banks to consider the final guidance as they develop their plan submissions.