FDIC Strengthens Resolution Committee with 2 EU Regulators
The Federal Deposit Insurance Corp. (FDIC) has announced the addition of two European financial regulatory veterans to its Systemic Resolution Advisory Committee. The committee will convene on December 5, 2023, to discuss the agency’s Dodd-Frank resolution authority. This move further strengthens the committee’s expertise and global perspective on resolving systemically important financial companies.
Introducing the New Committee Members
The first new member, Sir Jon Cunliffe, brings a wealth of experience to the committee. He previously served as the deputy governor for financial stability at the Bank of England and held key positions such as the UK permanent representative to the European Union and the international economic advisor to the Prime Minister.
The second addition to the committee is Elke Koenig, the former chair of the Single Resolution Board and former president of the German Federal Financial Supervisory Authority. Koenig’s expertise in resolution authority for banks in the euro area will be valuable in shaping the committee’s discussions and recommendations.
The Role of the Advisory Committee
The Systemic Resolution Advisory Committee provides advice and recommendations on various policy issues related to the resolution of systemically important financial companies. The committee, which now comprises 19 members, advises the FDIC on matters such as the effects of a company’s failure on financial stability and economic conditions, the impact on markets and stakeholders, and the structures and tools available for an orderly resolution.
The committee also plays a crucial role in coordinating global planning and preparation for the resolution of internationally active covered companies and standardizing resolution standards worldwide. Its insights help shape the FDIC’s approach to resolve complex financial institutions under its Dodd-Frank authority.
Frequently Asked Questions
Q: What is the purpose of the Systemic Resolution Advisory Committee?
A: The committee advises the FDIC on policy issues related to the resolution of systemically important financial companies.
Q: How many members are there in the committee?
A: The committee now consists of 19 members.
Q: What is the FDIC’s Dodd-Frank resolution authority?
A: Under Dodd-Frank authority, the FDIC has the power to orchestrate the orderly resolution of large, complex financial institutions that could pose a threat to U.S. financial stability.
Q: How will the new committee members contribute to the discussions?
A: Sir Jon Cunliffe and Elke Koenig bring extensive experience in European financial regulation, providing valuable insights and perspectives on resolution authority and global coordination.
Q: Can the public observe the upcoming committee meeting?
A: Yes, the meeting will be open for public observation via webcast.
Industry Response and Future Plans
Resolution planning has been a prominent focus for the FDIC following regional bank failures earlier this year. The agency has proposed tougher resolution planning requirements for banks with assets over $100 billion, as well as enhanced resolution plans for domestic and foreign banks with assets between $250 billion and $700 billion. The FDIC has also introduced new procedures for considering potential acquirers’ offers for failed banks with assets over $50 billion.
While larger banks’ trade groups have raised concerns about the potential impact of these measures, smaller banks view them as necessary to shift regulatory burden to riskier and more complex players. The FDIC remains committed to addressing the challenges of resolution planning and ensuring financial stability.
In conclusion, the addition of two EU regulators to the Systemic Resolution Advisory Committee strengthens the FDIC’s ability to address the resolution of systemically important financial companies. The committee’s diverse expertise will contribute to the development of sound policies and strategies for resolving complex financial institutions. As the banking industry continues to evolve, the FDIC remains proactive in ensuring financial stability and protecting the interests of all stakeholders.
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