The Federal Reserve announced the approval of a final rule to implement the Dodd-Frank resolution plan requirement set forth in Section 165(d) (the “Final Rule”). The Final Rule requires bank holding companies with assets of $50 billion or more and nonbank financial firms designated by the Financial Stability Oversight Council to annually submit resolution plans to the Federal Reserve and the FDIC.
On Tuesday morning, the Federal Deposit Insurance Corporation (“FDIC”) Board unanimously approved two rules regarding resolution planning: one rule for large bank holding companies and nonbank financial companies supervised by the Federal Reserve Board of Governors (“FRB”),1 and the other rule for large banks.2
The FDIC Board approved a final rule on the orderly liquidation process, which was the culmination of a series of rulemaking efforts begun earlier this year. The rule implements several provisions of Title II of the Dodd-Frank Act. Title II establishes an “orderly liquidation authority” (the “OLA”) through which the FDIC can be appointed as receiver and liquidate a covered financial company, such as a bank holding company, whose failure threatens to have serious adverse effects on financial stability in the U.S.
The July 6, 2011 Federal Deposit Insurance Corporation Board of Directors (the “FDIC Board”) meeting marked the changing of the guard from Chairman Sheila Bair to FDIC Vice Chairman Martin Gruenberg. Chairman Bair’s valedictory meeting was not merely ceremonial; it also covered several key developments regarding the timing of a final rule on resolution plans under section 165(d) of Title I and a final rule on the Orderly Liquidation Authority (“OLA”) under Title II.
A. RESOLUTION PLANS/ LIVING WILLS
The automatic stay is one of the most fundamental bankruptcy protections. It enjoins the initiation or continuance of any action by any creditor against the debtor or the debtor’s property, including causes of action possessed by the debtor at time of the bankruptcy filing. The automatic stay offers this protection while bringing all of the debtor’s assets and creditors into the same forum, the bankruptcy court.