Associations submit comment letter in support of the living will process and outlining lessons learned from past submissions
Washington, D.C. – Today, the Bank Policy Institute (BPI) and the Securities Industry and Financial Markets Association (SIFMA) submitted a comment letter on the proposed guidance issued by Federal Reserve and FDIC that would apply to the living wills prepared by the eight U.S. banks designated as G-SIBs. The letter strongly endorses the living will process for these banks and offers suggestions for improvements based on experience to date. Emphasizing that living wills are an important pillar of the post-crisis rulebook for the largest banks, BPI and SIFMA in the letter commend the agencies’ effort to update and refine their guidance through a public notice and comment process to make it more efficient and effective.
“The iterative process put in place by the Agencies seven years ago to develop the complex resolution planning framework was a wise path during the phase of resolution planning when it was new and unknown. [We] appreciate the Agencies’ consistent engagement with the filers over the years, their commitment to developing sophisticated approaches to resolution and their participation in international standards-setting bodies and fora. As a consequence, there has been an immense amount of learning, both by the filers and the Agencies over the last seven years, and tremendous progress has been made towards eliminating obstacles to an orderly resolution of a global systemically important banking organization,” the associations wrote.
BPI and SIFMA offer several recommendations for improving the proposed guidance, including:
- The agencies should explicitly acknowledge in the guidance what they have already indicated in practice–that an effective version of a single-point-of-entry (SPOE) resolution strategy is a credible means of resolving a G-SIB in an orderly manner.
- The separate resolution plan requirement for large insured depository institution subsidiaries (the IDI plan) should be eliminated for filers that have adopted SPOE as their preferred resolution strategy in their resolution plan for their U.S. bank holding company, as it is at odds with SPOE.
- Reflecting what has become current practice, the agencies should formalize the two-year submission and review cycle (including for the separate IDI plan, should it be retained).
- To improve transparency to the public, all applicable resolution planning requirements should be consolidated and made public, and all past guidance that is not consolidated and public should be deemed superseded.
- As a reflection of the importance of a coordinated and well-orchestrated approach to resolving global institutions, the agencies should engage more proactively with non-U.S. regulators to improve the efficiency of resolution planning requirements and enhance information-sharing across jurisdictions.
“The time has come to refine, consolidate and rationalize past guidance with current best practices, make the content of the guidance more transparent, streamline and focus the content of the submissions and more proactively engage with non-U.S. regulators to enhance the efficiency of the resolution planning process,” the letter states.
The Bank Policy Institute. The Bank Policy Institute is a nonpartisan public policy, research and advocacy group, representing the nation’s leading banks and their customers. Our members include universal banks, regional banks and the major foreign banks doing business in the United States. Collectively, they employ almost 2 million Americans, make nearly half of the nation’s small business loans, and are an engine for financial innovation and economic growth. For more information, visit www.bpi.com
The Securities Industry and Financial Markets Association. SIFMA is the leading trade association for brokerdealers, investment banks and asset managers operating in the U.S. and global capital markets. On behalf of our industry’s nearly 1 million employees, we advocate on legislation, regulation and business policy, affecting retail and institutional investors, equity and fixed income markets and related products and services. We serve as an industry coordinating body to promote fair and orderly markets, informed regulatory compliance, and efficient market operations and resiliency. We also provide a forum for industry policy and professional development. SIFMA, with offices in New York and Washington, D.C., is the U.S. regional member of the Global Financial Markets Association (GFMA). For more information, visit http://www.sifma.org.