Dodd-Frank Update: FDIC Final Rule for “Living Wills”

On September 13, the Federal Deposit Insurance Corporation approved its final rule requiring banks and other financial institutions to file “living wills:” road maps for rapidly liquidating the institutions in the event of severe financial distress. For your reference, a roundup of legal commentary and analysis regarding the rule, from leading law firms on JD Supra. We’ll continue to monitor and update this list as updates are published. 

Living Wills: The Final Rule — A User Guide (Morrison & Foerster LLP):

“With a final rule recently approved by the Federal Reserve Board of Governors and the Federal Deposit Insurance Corporation, and a related interim rule applying to covered insured depository institutions, every covered company, U.S. and worldwide, should now begin its early-stage resolution plan process. For a number of covered companies, this will involve submitting a resolution plan, or “living will,” for the organization as a whole, as well as a separate resolution plan for its covered insured depository institution(s). For all covered companies, this process involves a significant amount of internal organization and coordination, including participation by the board of directors and highest levels of management.” Read more»

FDIC Approves Rules Requiring Living Wills and Contingency Plans (Katten Muchin Rosenman LLP):

“This provision requires bank holding companies with assets of $50 billion or more and companies designated as systemic by the Financial Stability Oversight Council to report periodically to the FDIC and the Federal Reserve the company’s plan for its rapid and orderly resolution in the event of material financial distress or failure.” Read more»

Living Wills: FDIC Approves Final Rules (Morrison & Foerster LLP):

“Covered Companies include (i) all bank holding companies (including foreign banking organizations that are or are treated as bank holding companies) with consolidated assets of $50 billion or more and (ii) all nonbank financial companies that the Financial Stability Oversight Council designates for supervision by the FRB. A total of 124 Covered Companies are currently subject to the 165(d) Rule, the same number noted in the proposed rule. As with the proposed 165(d) Rule, the vast majority of Covered Companies appear to be foreign banking organizations.” Read more»

FDIC Adopts Final Rule Requiring “Living Wills” For Financial Institutions; Rule Requires Financial Institutions To Describe How They Will Be Liquidated (Lowenstein Sandler PC):

“Resolution plans must provide the FDIC with essential information concerning the financial institution’s structure, operations, business practices, financial responsibilities and risk exposures. The goal of the resolution plans is to describe how the FDIC, as receiver, will be able to wind-up the financial institution under the Federal Deposit Insurance Act in a way that provides depositors with access to their deposits within one business day of the institution’s failure (two business days if the failure occurs on a day other than Friday), maximizes the net present value return from the sale or disposition of its assets and minimizes the amount of any loss to be realized by the institution’s creditors.” Read more»

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Related Commentary and Analysis

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Dodd-Frank on Corporate Law Report

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