2014 Resolution Plans: The guidance you won’t receive

April 2014


Despite the absence of formal regulatory feedback on 2013 resolution plans, the nation’s largest financial institution (so-called “Category 1” firms) should not be complacent. Rather, the 11 Category 1 firms should continue to improve both their resolution plans and their resolvability, in particular through aggressively executing and reporting on planned improvements and other ex-ante actions.

Category 1 filers submitted their second resolution plans to the Federal Reserve and FDIC on
October 1, 2013. Using the guidance provided last spring (“April 2013 Guidance”), we believe most firms made significant enhancements to their resolution plans, and continue to develop and implement efforts to improve the resolvability of their firms.

In the April 2013 Guidance, the agencies identified five categories of obstacles to resolution. Firms were required to address each in their plans, including the actions taken or planned to mitigate each obstacle, with detailed plans and timelines for any ex-ante actions. The categories of obstacles are:

  • Multiple competing insolvencies
  • Global cooperation (or the lack thereof)
  • Operations and interconnectedness, and the risk of discontinuity of critical services
  • Counterparty actions, especially related to derivative close-outs
  • Funding and liquidity

Less than 90 days remain before the July 1, 2014 deadline for Category 1 firms’ third submissions. While it is difficult to advocate wholesale plan changes in the continued absence of meaningful firm-specific feedback, our strong advice is to not be complacent, and to continue to make progress on enhancing your plans.

This Regulatory Brief provides five suggestions for those firms deciding whether – and how – to further revise their resolution plans.

Contact us

Dan Ryan
US Banking and Capital Markets Leader
Tel: +1 (646) 471 8488

Alison Gilmore
US Asset and Wealth Management Marketing Leader
Tel: +1 (646) 471 0588