Originally published by American Banker
This month, more than two dozen banking organizations underwent a ritual that has become a massive undertaking: They submitted voluminous plans to their regulators detailing how they should be resolved in the event of failure. Some plans were submitted to the Federal Reserve and FDIC, and some to the FDIC alone. Some of these plans run into the tens of thousands of pages. Many more plans were submitted to regulators across the globe. If history is a guide, much of that work will prove to have been extraneous.
Following the failures of SVB, Signature and First Republic Bank in the United States and Credit Suisse in Switzerland, the FDIC and Federal Reserve expanded the U.S. resolution planning requirements for large banks. But a review of the responses to the 2023 bank failures shows that more expansive bank-prepared resolution plans are unnecessary to improve resolution readiness and could distract from real preparedness.
