April 02, 2019

US Agencies (FDIC and FED) adopted the final guidance for 2019 and subsequent resolution plan submissions by the eight largest, complex U.S. banking organizations (covered companies). The covered companies include Bank of America Corporation, The Bank of New York Mellon Corporation, Citigroup Inc., The Goldman Sachs Group, Inc., JPMorgan Chase & Co., Morgan Stanley, State Street Corporation, and Wells Fargo & Company. The final guidance is meant to assist these firms in developing their resolution plans, which are required to be submitted pursuant to the Dodd-Frank Act.

The final guidance, which is largely based on prior guidance issued to these covered companies in July 2018, describes the US Agencies' expectations about a number of key vulnerabilities in plans for an orderly resolution under the U.S. Bankruptcy Code. The final guidance also updates certain aspects of prior guidance based on the US Agencies' review of these firms' most recent resolution plan submissions. The proposed guidance described US Agencies' expectations in six substantive areas: capital, liquidity, governance mechanisms, operational, legal entity rationalization and separability, and derivatives and trading activities. US Agencies received and reviewed six comments on the proposed guidance.

After carefully considering the comments and conducting further analysis, US Agencies are issuing final guidance that includes certain modifications and clarifications to the proposed guidance. The payment, clearing, and settlement, along with the derivatives and trading activities, sections of the final guidance contain several changes based on respondents' suggestions, while retaining the key principles embodied in the proposed guidance. These principles include:

  • Streamlining submissions of fiurms
  • Facilitating continuity of payment, clearing, and settlement services in resolution
  • Helping ensure that a firm's derivatives and trading activities can be stabilized and de-risked during resolution without causing significant market disruption that could cause risks to the financial stability of the U.S.

 

Related Link: Final Guidance

 

Keywords: Americas, US, Banking, Resolution Planning, Dodd-Frank Act, Covered Companies, US Agencies, FDIC, FED

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