Large Financial Institutions to Submit Resolution Plan to US FDIC

In recent developments, the Federal Deposit Insurance Corporation has unanimously voted for the decision to have the largest financial institutions in the United States to submit a resolution plan in the eventuality of a failure. Updates as well as information in regard to their significant credit exposures will also have to be furnished.

There are 124 companies that find themselves subject under this ruling by FDIC.  They have to meet these requirements just so their company will be able to unwind in an orderly fashion in the situation of financial failure or trouble of the company.

However, what makes these resolution plans unique is the fact that it will be an ongoing process as the FDIC also wants them to provide updates of their plan within 45 days in an event of financial failure.

The FDIC has requested to review these resolution plans in order to verify whether the plans are credible or not as well as to determine whether or not the company can implement the resolution plan to its full extent.

In providing information regarding the organization structure as well as the corporate governance structure and their interdependencies between the covered companies and their subsidiaries, the said companies should keep in mind that the credibility of the resolution plan will be under scrutiny by FDIC regulators.  Companies with assets amounting to more than $50 billion can be asked to revise their plans if not deemed credible.