Bank / Credit Union

FDIC proposes changes for bank living will processes

August 15, 2023

The U.S. Federal Deposit Insurance Corp. proposed changes to how larger regional banks handle living wills in the event of a collapse, such as what occurred with Silicon Valley Bank, Signature Bank and First Republic Bank. The proposal would require that banks prepare a strategy for handling living wills based on how they sell off their businesses during a failure, according to a report by Reuters.

"To that end, the FDIC plans to issue a notice of proposed rulemaking in the near future that will be a comprehensive restatement of the rule for notice and comment," Martin Gruenberg, chairman of the FDIC, said in a speech at the Brookings Institute in Washington, D.C. "The proposed rule would require a bank to provide a strategy that is not dependent on an over-the-weekend sale."

These rules would require banks to identify parts of the business that could be sold separately and would require more information with banks with more than $50 billion in assets. It would also need to deliver more information so as to "expand the universe of possible acquirers," Gruenberg said.