FEDERAL DEPOSIT INSURANCE CORPORATION ADVISORY
1FEDERAL DEPOSIT INSURANCE CORPORATION ADVISORY COMMITTEE ON SYSTEMIC RESOLUTION MEETING W EDTHURSDAY,OCTOBER 1, 2020UNREVIEThe Advisory Committee convened at9:00 a.m. EDT via Video-Teleconference, JelenaMcWilliams, Chairman, presiding.L/PRESENT:UNOFFICIASHEILA BAIR, Former Chairman, Federal DepositInsurance CorporationDR. BEN S. BERNANKE, Distinguished Fellow inResidence with the Economic Studies Programat the Brookings Institution, FormerChairman of the Board of Governors of theFederal Reserve SystemMICHAEL BODSON, President and Chief ExecutiveOfficer, Depository Trust & ClearingCorporationHON. SHELLEY C. CHAPMAN, United States BankruptcyJudge, Southern District of New YorkH. RODGIN COHEN, Senior Chairman, Sullivan &Cromwell LLPGARY COHN, Former Assistant to the President forEconomic Policy and Director of the NationalEconomic CouncilWILLIAM H. DONALDSON, Former Chairman, U.S.Securities and Exchange Commission (SEC)(202) 234-4433Neal R. Gross and Co., Inc.Washington DCwww.nealrgross.com
2OFFICIAL/UNREVIEWEDROBERT DRAIN, United States Bankruptcy Judge,Southern District of New YorkPETER R. FISHER, Senior Fellow, Center for GlobalBusiness and Government at the Tuck Schoolof Business at Dartmouth UniversityRICHARD J. HERRING, Co-Director, The WhartonFinancial Institutions Center and Professorof Finance, The Wharton School, Universityof PennsylvaniaDONALD KOHN, Former Vice Chairman, Board ofGovernors of the Federal Reserve System andSenior Fellow, Economic Studies Program,Brookings InstitutionTIMOTHY J. MAYOPOULOS, President of Blend, FormerPresident and Chief Executive Officer ofFannie MaeSANDIE O'CONNOR, Former Chief Regulatory AffairsOfficer for JPMorgan Chase & Co.DOUGLAS L. PETERSON, President and ChiefExecutive Officer, S&P GlobalJOHN S. REED, Former Chairman and CEO ofCitigroup and Former Chairman, Corporationof Massachusetts Institute of TechnologyGARY H. STERN, Former CEO and President, FederalReserve Bank of Minneapolis and PresidingDirector and Chair of the Board RiskCommittee at the Depository TrustNFDIC PRESENT:UJELENA McWILLIAMS, Chairman, FDICMARTIN J. GRUENBERG, Board of Directors, FDICJASON CAVE, Senior Advisor to the Director forPolicy, Division of Complex InstitutionSupervision and ResolutionALEXANDRA BARRAGE, Associate Director for Policy,Policy and Data Analytics Branch, Divisionof Complex Institution Supervision andResolutionRICARDO DELFIN, Director, Office of ComplexFinancial Institutions(202) 234-4433Neal R. Gross and Co., Inc.Washington DCwww.nealrgross.com
3UNOFFICIAL/UNREVIEWEDELIZABETH FALLON, Deputy Director, Office ofComplex Financial InstitutionsKRISTA HUGHES, Associate Director, OperationsBranch, Division of Complex InstitutionSupervision and ResolutionJIM McGRAW, Deputy Director, Risk AssessmentBranch, Division of Complex InstitutionSupervision and ResolutionLORI QUIGLEY, Corporate Expert, Risk AssessmentBranch, Division of Complex InstitutionSupervision and ResolutionRYAN TETRICK, Deputy Director, ResolutionReadiness Branch, Division of ComplexInstitution Supervision and ResolutionJENNY TRAILLE, Division of Complex InstitutionSupervision and Resolution(202) 234-4433Neal R. Gross and Co., Inc.Washington DCwww.nealrgross.com
IEWED4REVC-O-N-T-E-N-T-SSession 1:ICIAL/UNWelcome and Introduction . . . . . . . . . . . . . 5Resolution Planning UnderNOFFBankruptcy . . . . . . . . . . . . . . . . . . . . 9USession 2:Resolution Planning under theOrderly Liquidation Authority. . . . . . . . . . .98Closing Remarks. . . . . . . . . . . . . . . . . 179(202) 234-4433Neal R. Gross and Co., Inc.Washington DCwww.nealrgross.com
51P-R-O-C-E-E-D-I-N-G-S2(9:03 a.m.)3CHAIRMAN MCWILLIAMS:Good morning,4everybody.52020 meeting of the Systemic Resolution Advisory6Committee.I look forward to discussing our workED7I'm pleased to welcome you to thein progress in navigating the challenges9associated with resolving systemically importantIEEV10W8financial companies.But first, I would be remiss if IUNR11didn't mention the passing of Paul Volcker.He13worked with many of us on the Committee and he14was the original Member of the Committee.FFICIAL/12The SRAC was formed in 2011 as a forumO15for the FDIC to bring together expertise inside17and outside the Agency to discuss the challenges,18opportunities, and progress being made to19implement our systemic resolution mission.UN1620This year's meeting is another step21forward in that effort.22five new Members with tremendous knowledge and(202) 234-4433I'm honored to welcomeNeal R. Gross and Co., Inc.Washington DCwww.nealrgross.com
61experience.2I would like to say that thisCommittee is a Committee of superstars.4former Chairman of the Board of Governors of the5Federal Reserve, Dr. Ben Bernanke who is6currently a distinguished fellow in residence at7the Brookings Institution.I had the honor of serving as a staffW8IEattorney under Dr. Bernanke, Chairman BernankeEV9First,ED3during the financial crisis and I think the world11of him.UNR10Second, Mr. Gary Cohn who recentlyL/12served as Assistant to the President for Economic14Policy and Director of the National Economic15Council and prior to that was President and Chief16Operating Officer of the Goldman Sachs.FFONU17ICIA13Third, the Honorable Robert Drain, a18United States bankruptcy judge for the Southern19District of New York who is also the current20Chair of the Bankruptcy Judge's Advisory Group.21Fourth, Mr. Tim Mayopoulos, President22of Blend, a Silicon Valley technology company and(202) 234-4433Neal R. Gross and Co., Inc.Washington DCwww.nealrgross.com
71former president and CEO of Fannie Mae and2general counsel of Bank of America.3And fifth, it is my pleasure towelcome Ms. Sandie O'Connor, former Chief5Regulatory Affairs Officer for JPMorgan Chase and6former member of the Alternative Reference Rates7Committee and the Federal Reserve Bank of New8York's Treasury Markets Practices Group.WED4Welcome and thank you all for joiningEVIE9our Committee.I would also like to welcome back11our returning Committee Members, all superstars.12We greatly appreciate the time and efforts you13have committed to the SRAC and I couldn't be more14honored to have you as Members of this Committee.FFICIAL/UNR10I look forward to hearing yourO15thoughts and ideas on our progress and next17steps.18Rick Delfin, Director of the Division of Complex19Institution Supervision and Resolution to provide20an overview of today's meeting agenda and discuss21the creation of this new division.22MR. DELFIN:UN16(202) 234-4433I will now hand the microphone over toGreat.Thank you.Thank you,Neal R. Gross and Co., Inc.Washington DCwww.nealrgross.com
81Chairman McWilliams.2me okay.3And I hope you can all hearI want to thank you all for joining us4today.As the Chairman mentioned, my name is5Ricardo Delfin.6I'm the Director of the FDIC's newDivision of Complex Institution Supervision and8Resolution, the group responsible for9implementing the FDIC's systemic resolutionWIEEV10ED7mission.I'm sorry we need to do this by video.UNR11But I very much appreciate everyone taking the13time to participate today.ICIAL/12As you probably are used to by now inFF14this era, there are a few sort of technology16related items to start that I just wanted to17flag.18everyone please mute their microphones when they19are not speaking, just to avoid feedback and help20the others' audio.UNO15First, to improve the audio we ask that21Second, though there is a raise hand22function on your screen if you would like to ask(202) 234-4433Neal R. Gross and Co., Inc.Washington DCwww.nealrgross.com
91a question, we also want you to please feel free2to just jump in at any point and ask a question.3We very much want to get your thoughts and4feedback today and wouldn't want the technology5to get in the way of any of that.6Finally, while there is also a chatfunction we would ask that everyone only use the8chat function to request technical assistance.9Because this is a public event under the FederalEVIEWED7Advisory Committee Act, we encourage Members to11please share their substantive thoughts and12comments as part of the normal discussion.L/UNR10Having gotten all of that out of theICIA13way, we can now move on to the heart of the15meeting.16the work that we've done here at the FDIC on the17systemic resolution as well as the progress we18have made and the topics still being tackled.FF14UNOToday we would like to update you on19As you know, following the 2008 global20financial crisis, Congress established new21authorities for the FDIC to manage the orderly22resolution of large complex financial(202) 234-4433Neal R. Gross and Co., Inc.Washington DCwww.nealrgross.com
101institutions whose failure could threaten U.S.2financial stability.3One authority under Title 1 of theDodd-Frank Act requires that certain large5complex bank holding companies and designated6non-banks file resolution plans or living wills7that outline how the firm might be resolved in an8orderly way under the U.S. Bankruptcy Code, the9statutory first option for failure.EVIEWED410These plans are reviewed by the FDICand the Federal Reserve who can then identify12deficiencies or shortcomings in the plan for13remediation.ICIAL/UNR11The second authority under Title 2 ofFF14the Act establishes the orderly liquidation16authority or OLA.17regime run by the FDIC to resolve large complex18financial institutions in circumstances when19failure and bankruptcy could threaten U.S.20financial stability.2122It is a backstop resolutionUNO15This authority was based on the FDIC'slongstanding tools for traditional bank(202) 234-4433Neal R. Gross and Co., Inc.Washington DCwww.nealrgross.com
111resolution.In the intervening years we have2engaged with this Committee at length to test our3thinking and solicit your thoughts and feedback4and we look forward to doing that again today.To help at this stage, especially for6some of our newer Members, I thought I would look7back briefly at the evolution of our work and the8discussions within the SRAC.WED5We began the first SRAC meetings10focusing largely on the establishment of the11Orderly Liquidation Authority and a core12resolution strategy called the single point of13entry strategy.ICIAL/UNREVIE9The shorthand you might hear today isFF14the phrase SPOE.Under this strategy the FDIC16would put a failing G-SIBs holding company into17receivership, use or bail in the firm's pre-18funded resources to recapitalize its material19entity subsidiaries, and transfer the20subsidiaries and other assets to a new,21stabilized bridge financial company.UNO1522Because firm's critical operations are(202) 234-4433Neal R. Gross and Co., Inc.Washington DCwww.nealrgross.com
121housed in the newly recapitalized material entity2subs, the critical operations should be3maintained and financial stability impacts can be4mitigated.5As this strategy develops we thendiscussed a number of structural reforms and we7put those in place in the U.S. and around the8world to help operationalize this strategy.9reforms included the promulgation of a number ofIEWTheEV10ED6rules.For example, ensuring that certainUNR11financial companies have a minimum amount of13long-term debt or TLAC, total loss of absorbing14capacity.FFICIAL/12We also promulgated a role with theO15Federal Reserve to promote clean holding17companies which would simplify the debt stack of18these firms to better enable the bailing in of19that debt and resolution.UN1620And we also facilitated, passed rules21to facilitate the orderly transfer of qualified22financial contracts to a bridge entity in order(202) 234-4433Neal R. Gross and Co., Inc.Washington DCwww.nealrgross.com
131to help avoid early termination fostering2financial stability.3Over time firms and regulators alsobegan to recognize the potential benefits of the5SPOE strategy to the bankruptcy planning or6living will process that we discussed earlier.7We and our partners at the FederalED4Reserve identified key obstacles to SPOE9resolution and bankruptcy and provided guidanceEVIEW8to firms as to how these obstacles might be11mitigated or addressed.UNR10We continued to meet with thisL/12Committee as the process evolved and updated it14on work being done by firms through their Title 115resolution plans to improve resolvability under16the Bankruptcy Code by addressing key obstacles.FFONU17ICIA13Through the evolution of that work,18the Agency has found that firms had made19significant progress addressing these obstacles20and areas for ongoing work.21engagement, we have also learned quite a bit22about this challenge and this process and we have(202) 234-4433Through thisNeal R. Gross and Co., Inc.Washington DCwww.nealrgross.com
141adapted over the years based on the lessons we2have learned.3For example, in the early years4planning under bankruptcy and under OLA were5viewed as two entirely different processes with6different teams working on them.Over time, however we found thatED7though there are important differences in each9process there is also a lot of overlap between a10single point of entry strategy under the OLA and11a single point of entry strategy in bankruptcy.UNREVIEW8As a result, we changed our approachL/12to these processes and started leveraging the14best solutions to particular obstacles in our own15planning.16efforts are complimentary.FFOAnd we also found that these twoNU17ICIA13That is the progress that firms make18improving their resolvability in bankruptcy, also19improves resolvability under OLA and vice versa.20Our concept of resolution planning also changed.2122Over the years we moved off of whatpeople accused us of paper exercises and we(202) 234-4433Neal R. Gross and Co., Inc.Washington DCwww.nealrgross.com
151deemphasized specific failure scenarios, knowing2that we would never guess the right ones, and we3began focusing more on resolution related4capabilities that could be usable in any5scenario.Now, I don't know if anyone has ever7compared systemic resolution to gardening before8so I'll be the first.9really started to come together and bloom forED6EVIEWBut this is when thingslack of a better word and sometimes in unexpected11ways.UNR10Interestingly, in addition to theL/12synergies we saw between Title 1 and Title 214planning we also started to see nice synergies15between resolution planning and recovery and good16old fashioned risk management.FFONU17ICIA13That is there are resolution planning18efforts that firms can take that pay dividends19outside of resolution and actually improve firm's20resilience and flexibility in an actual crisis,21which is the best outcome of all.22going to talk about some of those today.(202) 234-4433Neal R. Gross and Co., Inc.Washington DCAnd we'rewww.nealrgross.com
161These learnings and the changes we've2been making based on them will be the foundation3of our discussion today.4If all that sounds okay, I can getstarted by highlighting some of the other6organizational changes we've made to strengthen7our mission and specifically the establishment of8the new Division of Complex Institution9Supervision and Resolution before moving on toWIEEV10ED5updates on the rest of the program.With that, I'll just briefly pause forUNR11questions and see if there is anything out there13and then I'll move on to talk about CISR.14Well, thanks.Okay.FFICIAL/12So, CISR as I call it -- others haveO15different names, some call it CISR, some call it17CISR.18established in July 2019 to bring together the19FDIC's backup supervisory and resolution20functions for the largest most complex financial21institutions.UN1622C-I-S-R seems safest to me.CISR wasOne of the early lessons we've learned(202) 234-4433Neal R. Gross and Co., Inc.Washington DCwww.nealrgross.com
171was that large institutions are different.2Though the FDIC has incredible experience dating3all the way back to the Great Depression with the4smaller bank resolution, our experience with5large institution resolution is far more limited.6We simply don't benefit from decadesof trial and error with these firms or resolution8strategies.9degree of complexity and the potential impact on10financial stability means the resolution options11and strategies are more constrained.ED7UNREVIEWThe scope of their activities, theGiven the unique characteristics ofL/12each firm and the need to maintain critical14operations and avoid contagion, a deeper15understanding and advanced planning and active16cross-border coordination are critical.FFONU17ICIA13Bringing together the supervision and18resolution teams for these institutions has19allowed us to leverage specialized skill sets,20simplify our structure and I hope, foster21collaborative interdisciplinary approach to this22challenge, one that enhances both our supervision(202) 234-4433Neal R. Gross and Co., Inc.Washington DCwww.nealrgross.com
181and our resolution preparedness for the large,2most complex financial institutions.3The discussions today led by this new4team will display some of the practical benefits5of this ongoing integration.6agenda today is split among two broad sessions7with a 15 minute break in between, basically8based on the two statutory provisions, Title 19and Title 2.EVIEWEDSubstantively, ourThe first session will highlight the11key changes and updates we've made to the living12will process since our last meeting in 2018,13including some interesting lessons from this14spring's market volatility.FFICIAL/UNR10The second session will focus our workO15on strengthening the resolution framework for17systemically important financial institutions18under the backstop Orderly Liquidation Authority.19There has been a lot of work to increase our20operational readiness and I look forward to the21input of this Panel.UN1622This portion of the agenda will begin(202) 234-4433Neal R. Gross and Co., Inc.Washington DCwww.nealrgross.com
191to focus on our progress and planning for G-SIBs2and then shift to a few updates on the non-bank3space focusing on recent FDIC/SEC rulemaking for4broker dealers and resolution planning for CCPs.5So, over the years we have learned agreat deal from these SRAC sessions and7discussions and we very much welcome your8thoughts or questions at any time throughout the9session.WIEAnd I mean it, please don't hesitate atEV10ED6all to raise your hand or frankly jump right in.With that, I would be happy to takeUNR11any initial thoughts or questions that you may13have.14Quigley and Jason Cave, two of our corporate15experts who are leading the Title 1 process to16help talk through some of the work being done17with the Federal Reserve and specific18institutions on firm developed resolution plans.L/12UNOFFICIAAnd if not, I will hand it over to Lori19So, unless there are any questions, I20just want to pause there.21thanks, everyone and I'll hand it over to Lori22Quigley and Jason Cave.(202) 234-4433No, okay.Well,Lori?Neal R. Gross and Co., Inc.Washington DCwww.nealrgross.com
2012MS. QUIGLEY:Thank you, Rick.Hopefully you can hear me okay.3MR. DELFIN:4MS. QUIGLEY:Yes, sounds great.All right.So, Jasonand I will provide a brief update on a few Title61 developments since the last meeting and then7we're going to turn it over to Jim McGraw who is8going to provide a meaningful discussion9regarding the lessons learned and on the COVIDWIEEV10ED5response.In our discussion this morning we're12going to touch upon the resolution plan process,13provide you a brief background on how the review14process works with the Federal Reserve.15also going to talk about the 2019 review and16findings for the eight U.S. G-SIBs.UNL/ICIAOFFWe'reNU17R11There was also a critical ops,18critical operations project that occurred this19year that we'll just briefly talk about.20then there was also an amended rule to the Title211.22well.AndSo, we're just going to touch upon that as(202) 234-4433Neal R. Gross and Co., Inc.Washington DCwww.nealrgross.com
211So, with that I believe we're on Slide25.And I'm just going to spend a few minutes on3the process when
Oct 01, 2020 · RICHARD J. HERRING, Co-Director, The Wharton Financial Institutions Center and Professor of Finance, The Wharton School, University of Pennsylvania DONALD KOHN, Former Vice Chairman, Board of Governors of the Federal Reserve System and Senior Fellow, Economic Studies Program, Brookings Institution T
1.2 European history of deposit insurance 11 1.3 Deposit insurance as an element in the financial safety net 12 2 Deposit insurance fundamentals 15 2.1 Aims and requirements of a modern deposit insurance scheme 15 2.1.1 Aims of deposit insurance 15 2.1.2 Requirements of a deposit insurance scheme 17 2.2 Guarantee promises 19
Minutes of The Meeting of the FDIC Advisory Committee on Economic Inclusion of the Federal Deposit Insurance Corporation Held in the Board Room Federal Deposit Insurance Corporation Building Washington, D.C. Open to Public Observation April 24, 2014 9:04 A.M. The meeting of the FDIC Advisory Committee on Economic
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Financial inclusion and deposit insurance: It stands to reason that deposit insurance should promote financial inclusion by bolstering confidence in financial institutions and potentially leading to greater savings among the poor. Access to deposit insurance should provide a measure of protection to small savers, provided they are informed
discusses main features of the deposit insurance schemes and section 5 concludes. The database, country details and sources are presented in the appendix. 2. Deposit insurance adoption As Demirgüç-Kunt, Kane and Laeven (2005) point out, every country has a de facto implicit deposit insurance scheme (IDIS) in place since governments get .
KENYA DEPOSIT INSURANCE ACT No. 10 of 2012 Revised Edition 2012 Published by the National Council for Law Reporting with the Authority of the Attorney-General www.kenyalaw.org [Rev. 2012] No. 10 of 2012 Kenya Deposit Insurance 3 [Issue 1] NO. 10 OF 2012 KENYA DEPOSIT INSURANCE ACT ARRANGEMENT OF SECTIONS
