“The Dodd-Frank Act presents many new regulatory compliance changes for the financial sector, but also to public companies that had little or nothing to do with the financial crisis.” The editor of Metropolitian Corporate Counsel inteviews Heath Tarbert, Head of Weil’s Financial Regulatory Reform Working Group for the October 2011 edition. Topics such as public company preparation, systemic risk, “living wills,” and rulemaking uncertainty are covered in this timely interview. [click to continue…]
Bankruptcy & Liquidation
Weil’s Harvey Miller was interviewed by The Deal’s Sarah Hashim-Waris on the possibility of a “double-dip” recession for the US economy. Harvey also touched on the necessity of sound regulation in connection with managing too-big-to-fail financial institutions.
Harvey Miller: Economy ‘treacherous,’ double dip possible from The Deal on Vimeo.
By: Alex Radetsky
On October 3, 2011, the Financial Stability Board (“FSB”) , an organization comprised of governmental and other financial authorities from around the world, including the SEC, Federal Reserve and Deptartment of Treasury for the U.S., approved a package of policy proposals meant to address systemic risk and “too big to fail” issues which will be submitted to the G20 Summit in November. The policy proposals include:
- Standards for effective resolution regimes for financial institutions
- Requirements that globally important systemically important financial institutions (“G-SIFIs”) develop and submit recovery and resolution plans
- The development of cooperation agreements and cross-border crisis management groups by home and host regulators of G-SIFIs
- Additional loss absorbency requirements for G-SIFIs
- Improved data systems for risk management and assessments of the adequacy of supervisory resources, among other measures to enhance the intensity and effectiveness of the supervision of financial institutions
- Enhanced international standards for the robustness of core financial market infrastructures
Appearing on Bloomberg Television’s “InsideTrack” with Erik Schatzker, Weil’s Harvey Miller discusses issues relating to a potential Countrywide Financial bankruptcy. Countrywide Financial was purchased by Bank of America for approximately $4 billion in early 2008.
Among the many considerations discussed during the segment, Harvey addresses the uncertainty of whether Countrywide would be considered a “systemically important financial institution” under the Dodd-Frank Act.
by Derrick Cephas, Walt Zalenski, Sylvia Mayer, Conray Tseng, and Tim Welch
On September 13, 2011, the Federal Deposit Insurance Corporation (FDIC) issued two rules requiring large financial institutions to submit resolution plans in contemplation of their failure. These two rules, which impose concurrent deadlines on covered institutions, share many similarities, as well as certain significant distinctions. Moreover, many institutions will be subject to both rules. This article addresses the distinct parameters, but similar purposes and prescriptions, of the two rules and common, outstanding issues with respect to their implementation.
The Rules at Issue
DFA Res-Plan Rule
The first rule, which was issued in final form pending approval by the Board of Governors of the Federal Reserve System (FRB) and will be codified at 12 CFR 381, addresses resolution planning as required under Section 165(d) of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act). This rule requires bank holding companies (BHCs) with $50 billion or more in consolidated assets and other specified categories of covered companies to submit an annual resolution plan (DFA Res-Plan), often referred to as a “living will,” to the FDIC and FRB. The DFA Res-Plan must include a strategic analysis outlining utilization of the Bankruptcy Code or other applicable insolvency regimes to facilitate the rapid and orderly resolution of the institution in a manner that avoids systemic risk to the U.S. financial markets in the event of material financial distress or failure of the BHCs or one or more of its systemically important subsidiaries. We previously reported on the DFA Res-Plan rule here.
IDI Res-Plan Rule
The second rule, which was issued in interim final form pending an additional comment period, covers resolution planning by insured depository institutions (IDIs) with $50 billion or more in assets. This rule (codified at 12 CFR 360) requires covered IDIs to submit an annual resolution plan (IDI Res-Plan) to the FDIC. IDIs are not eligible to file bankruptcy. Instead, resolution of an IDI involves the FDIC being appointed receiver of the IDI pursuant to the Federal Deposit Insurance Act (FDIA). As a result, an IDI Res-Plan must include a strategic analysis outlining how the FDIC should proceed with the rapid and orderly resolution of the IDI pursuant to FDIA in the event of the IDI’s material financial distress or failure.
