AGENCY:

Board of Governors of the Federal Reserve System (Board) and Federal Deposit Insurance Corporation (Corporation).

ACTION:

Final rule.

SUMMARY:

The Board and the Corporation (together, the agencies) are jointly adopting this final rule implementing the resolution planning requirements of section 165(d) of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the Dodd-Frank Act). This final rule is intended to reflect improvements identified since the agencies finalized their joint resolution plan rule in November 2011 (2011 rule) and to address amendments to the Dodd-Frank Act made by the Economic Growth, Regulatory Relief, and Consumer Protection Act (EGRRCPA). Through this final rule, the Board is also establishing risk-based categories for determining the application of the resolution planning requirement to certain U.S. and foreign banking organizations, consistent with section 401 of EGRRCPA. The final rule also extends the default resolution plan filing cycle, allows for more focused resolution plan submissions, and improves certain aspects of the resolution planning rule.

DATES:

This rule is effective December 31, 2019.

FOR FURTHER INFORMATION CONTACT:

 

Board: Mona Elliot, Deputy Associate Director, (202) 912-4688, Catherine Tilford, Assistant Director, (202) 452-5240, Kathryn Ballintine, Lead Financial Institution Policy Analyst, (202) 452-2555, or Tudor Rus, Lead Financial Institution Policy Analyst, (202) 475-6359, Division of Supervision and Regulation; or Laurie Schaffer, Associate General Counsel, (202) 452-2272, Jay Schwarz, Special Counsel, (202) 452-2970, Steve Bowne, Senior Counsel, (202) 452-3900, or Sarah Podrygula, Attorney, (202) 912-4658, Legal Division, Board of Governors of the Federal Reserve System, 20th and C Streets NW, Washington, DC 20551. For users of Telecommunications Device for the Deaf (TDD), (202) 263-4869.

Corporation: Lori J. Quigley, Deputy Director, Institutions Monitoring Group, lquigley@fdic.gov; Robert C. Connors, Associate Director, Large Bank Supervision Branch, rconnors@fdic.gov; and Alexandra Steinberg Barrage, Associate Director, Resolution Strategy and Policy, Division of Complex Institution Supervision & Resolution, abarrage@fdic.gov; or David N. Wall, Assistant General Counsel, dwall@fdic.gov; Celia Van Gorder, Supervisory Counsel, cvangorder@fdic.gov; Dena S. Kessler, Counsel, dkessler@fdic.gov; or Ryan M. Rappa, Counsel, rrappa@fdic.gov, Legal Division, Federal Deposit Insurance Corporation, 550 17th Street NW, Washington, DC 20429.

SUPPLEMENTARY INFORMATION:

I. Introduction

A. Background

B. Overview of the Proposed Rule

II. Overview of Comments

III. Final Rule

A. Identification of Firms Subject to the Resolution Planning Requirement and Filing Groups

1. Firms Subject to the Resolution Planning Requirement

2. Filing Groups and Filing Cycle

B. Resolution Plan Content

1. General Guidance and Firm-Specific Feedback

2. Material Changes and Extraordinary Events

3. Full Resolution Plans

4. Waivers of Informational Content Requirements

5. Targeted Resolution Plans

6. Reduced Resolution Plans

7. Tailored Resolution Plans

C. Critical Operations Methodology and Reconsideration Process

1. Identification by Covered Companies and Methodology Requirement

2. Identification by Agencies and Requests for Reconsideration

D. Clarifications to the 2011 Rule

1. Resolution Strategy for Foreign-Based Covered Companies

2. Covered Companies in Multi-Tier Foreign Banking Organization Holding Companies

3. Removal of the Incompleteness Concept and Related Review

4. Assessment of New Covered Companies

5. Timing of New Filings, Firms That Change Filing Categories

6. Clarification of the Mapping Expectations for Foreign Banking Organizations

7. Standard of Review

8. Deletion of “Deficiencies” Relating to Management Information Systems

9. Incorporation by Reference

E. Technical and Conforming Changes From the Proposal

F. Board Delegation of Authority

IV. Effective Date and Transition Period

V. Impact Analysis

VI. Regulatory Analysis

A. Paperwork Reduction Act

B. Regulatory Flexibility Act

C. Riegle Community Development and Regulatory Improvement Act of 1994

D. Plain Language

E. The Congressional Review Act

I. Introduction

A. Background

Section 165(d) of the Dodd-Frank Act ^[1] and the 2011 rule ^[2] require certain financial companies (covered companies) to report periodically to the agencies their plans for rapid and orderly resolution under the U.S. Bankruptcy Code (the Bankruptcy Code) in the event of material financial distress or failure. The goal of the Dodd-Frank Act resolution planning process is to help ensure that a covered company's failure would not have serious adverse effects on financial stability in the United States. The Dodd-Frank Act and the 2011 rule require a covered company to submit a resolution plan for review by the agencies. The resolution planning process requires covered companies to demonstrate that they have adequately assessed the challenges that their structures and business activities pose to a rapid and orderly resolution in the event of material financial distress or failure and that they have taken action to address those challenges, including through the development of capabilities appropriate to the covered company's size and complexity.

Implementation of the 2011 rule has been an iterative process aimed at strengthening the resolvability and resolution planning capabilities of covered companies. Since finalization of the 2011 rule, the agencies have reviewed multiple resolution plan submissions and have provided feedback on individual resolution plans following their review by the agencies (firm-specific feedback) and guidance directed to groups of firms (general guidance) to assist covered companies in their development of subsequent resolution plan submissions.

EGRRCPA revised the resolution planning requirement as part of the changes the law made to application of the enhanced prudential standards in section 165 of the Dodd-Frank Act. Specifically, EGRRCPA raised the $50 billion minimum asset threshold for general application of the resolution planning requirement to $250 billion in total consolidated assets, and provided the Board with discretion to apply the resolution planning requirement to firms with $100 billion or more and less than $250 billion in total consolidated assets.^[3] The threshold increase occurs in two stages. Immediately on the date of EGRRCPA's enactment, firms with total consolidated assets of less than $100 billion (for foreign banking organizations, $100 billion in total global assets) were no longer subject to the resolution planning requirement. Eighteen months after the date of EGRRCPA's enactment, the threshold increases to $250 billion in total consolidated assets. However, EGRRCPA provides the Board with the authority to apply resolution planning requirements to firms with $100 billion or more and less than $250 billion in total consolidated assets. Specifically, under section 165(a)(2)(C) of the Dodd-Frank Act, as revised by EGRRCPA, the Board may, by order or rule, apply the resolution planning requirement to any firm or firms with total consolidated assets of $100 billion (for foreign banking organizations, $100 billion in total global assets) or more.^[4]

In May 2019, the agencies invited comment on a proposal to amend and restate the 2011 rule (the proposed rule or proposal).^[5] The proposed rule was intended to address amendments to the Dodd-Frank Act made by the EGRRCPA and improve certain aspects of the 2011 rule based on the agencies' experience implementing the 2011 rule since its adoption. The agencies are now finalizing the proposed rule, with certain changes based on public comments on the proposed rule, as described in detail below.

The Board's Tailoring Rules

Consistent with section 401 of EGRRCPA, the Board finalized two separate proposals to revise the framework for determining the prudential standards that should apply to large U.S. banking organizations (domestic tailoring rule) ^[6] and to large foreign banking organizations (FBO tailoring rule ^[7] and together with the domestic tailoring rule, the tailoring rules). Among other provisions, the tailoring rules identify distinct standards applicable to firms for the purpose of calibrating requirements. The tailoring categories established in the tailoring rules are as follows:

• Category I standards will apply to:

○ Global systemically important bank holding companies (U.S. GSIBs),

• Category II standards will apply to:

○ U.S. firms that are not subject to Category I standards with (a) $700 billion or more in average total consolidated assets, or (b) $100 billion or more in average total consolidated assets that have $75 billion or more in average cross-jurisdictional activity, and

○ Foreign banking organizations with (a) $700 billion or more in average combined U.S. assets,^[8] or (b) $100 billion or more in average combined U.S. assets that have $75 billion or more in average cross-jurisdictional activity measured based on the foreign banking organization's combined U.S. operations.^[9]

• Category III standards will apply to:

○ U.S. firms that are not subject to Category I or Category II standards with (a) $250 billion or more in average total consolidated assets, or (b) $100 billion or more in average total consolidated assets that have $75 billion or more in any of the following risk-based indicators: Average total nonbank assets, average weighted short-term wholesale funding, or average off-balance sheet exposure, and

○ Foreign banking organizations that are not subject to Category II standards with (a) $250 billion or more in average combined U.S. assets, or (b) $100 billion or more in average combined U.S. assets that have $75 billion or more in any of the following risk-based indicators measured based on the combined U.S. operations: Average total nonbank assets, average weighted short-term wholesale funding, or average off-balance sheet exposure and

• Category IV standards will apply to:

○ U.S. firms with $100 billion or more in average total consolidated assets that do not meet any of the thresholds specified for Categories I through III, and

○ Foreign banking organizations with $100 billion or more in average combined U.S. assets that do not meet any of the thresholds specified for Categories II or III.

These categories form the basis for the final rule's framework for imposing resolution planning requirements, with adjustments where appropriate. The categories are also used to tailor the content of the resolution planning requirements, taking into account covered companies' particular geographic footprints, operations, and activities, as described below.

B. Overview of the Proposed Rule

Under the proposed rule, resolution planning requirements would have applied to (1) those firms that are statutorily required to submit resolution plans (i.e., U.S. and foreign banking organizations with $250 billion or more in total consolidated assets, the U.S. GSIBs, and any non-bank financial company designated by the Financial Stability Oversight Council (Council) for supervision by the Board) and (2) firms with total consolidated assets of $100 billion or more and less than $250 billion that would have been subject to Category II or III standards under the notices of proposed rulemaking for the tailoring rules. In particular, the Board would have applied resolution planning requirements to firms with total consolidated assets of $100 billion or more and less than $250 billion that would have had $75 billion or more in any of the following four risk-based indicators: Cross-jurisdictional activity, nonbank assets, weighted short-term wholesale funding, or off-balance-sheet exposure. In the case of a foreign banking organization, resolution planning requirements would only have applied if the firm also had combined U.S. assets equal to $100 billion or more, and the risk-based indicators would have been measured based on the firm's combined U.S. operations.

The proposed rule would have divided firms subject to resolution planning requirements into three categories for purposes of determining submission frequency and resolution plan content requirements. The U.S. GSIBs would have been required to submit a resolution plan every two years, alternating between full and targeted resolution plans. Firms subject to Category II or III standards under the notices of proposed rulemaking for the tailoring rules would have been required to submit a resolution plan every three years, alternating between full and targeted resolution plans. Other foreign banking organizations subject to the proposed rule but not subject to Category II or III standards would have been required to submit a resolution plan every three years, with their initial filing being a full resolution plan and each subsequent submission being a reduced resolution plan. The proposal would have generally maintained the same informational content requirements for full resolution plans as under the 2011 rule, but would have established a new process whereby covered companies could request a waiver from certain informational content requirements in their full resolution plans. Under the proposal, covered companies would have been required to include in targeted resolution plans and reduced resolution plans information about certain changes since their previous resolution plan submission. Targeted resolution plans would also have included information about certain resolution planning core elements and information responsive to the agencies' targeted information requests.

The proposed rule would also have made certain procedural changes to the provisions of the 2011 rule relating to the identification of critical operations. The proposal would have established formal processes for firms and the agencies to identify particular operations of covered companies as critical operations and to rescind prior critical operations identifications made by the agencies. In addition, the proposal would have specified a process for a covered company to request reconsideration of operations previously identified by the agencies as critical operations, and required that a covered company notify the agencies if it ceased to identify an operation as a critical operation.

II. Overview of Comments

The agencies received and reviewed 14 comment letters on the proposed rule. Commenters included various financial services trade associations, covered companies, public interest groups, and individuals. In addition, the agencies met with industry representatives at their request to discuss issues relating to the proposed rule. This section provides an overview of the general themes raised by commenters. Comments are addressed in further detail in the below sections describing the final rule, including any changes that the agencies have made to the proposed rule in response to comments.

General Support and Opposition

A number of commenters generally supported the proposed rule. These commenters supported the proposed rule's efforts to tailor resolution planning requirements to a firm's size, complexity, and risk profile, and asserted that the proposed rule would preserve and improve upon key elements of resolution planning while enhancing transparency and meaningfully reducing burden.^[10]

Several commenters raised concerns about the proposed rule. These commenters generally asserted that the proposed rule would inappropriately weaken financial regulations put in place after the 2008 financial crisis and thereby increase systemic risk. In addition, certain commenters asserted that the proposed rule inappropriately relied on burden reduction as a rationale for the proposed changes, was inconsistent with administrative law because the agencies did not provide sufficient justification for reducing the frequency and content of resolution plans, and was inconsistent with the Dodd-Frank Act. One commenter questioned whether firms would reallocate resources no longer needed to comply with the current rule to activities considered to be more beneficial, and whether any such benefit would accrue to the public at large. One commenter also asserted that the agencies should delay modifying the 2011 rule until it has been tested in an economic downturn, and another commenter asserted that the agencies should be cognizant of the effect of regulations on non-financial companies and small business lending. As further explained below, the final rule would continue to apply appropriate requirements on firms based on the relative risk that a firm's failure would pose to U.S. financial stability, and would preserve and improve upon key elements of the resolution planning framework that were put in place after the 2008 financial crisis. The agencies believe that this approach is consistent with the Dodd-Frank Act, as amended by the EGRRCPA, which generally provides for the tailoring of enhanced prudential standards based on firms' capital structure, riskiness, complexity, financial activities (including financial activities of subsidiaries), size, and other risk-related factors. Moreover, since the finalization of the 2011 rule, the agencies have reviewed multiple resolution plan submissions and have provided firm-specific feedback and general guidance to assist the covered companies in their development of subsequent resolution plan submissions. Consequently, covered companies' submissions and the agencies' firm-specific feedback and general guidance have matured over several resolution plan cycles, and the agencies believe this is an appropriate time to revise the 2011 rule to reflect improvements identified since it was originally adopted, including changes in the frequency and content of resolution plans, for the reasons stated in the proposal and this preamble.^[11]

2019 and 2020 Plans

The agencies received several comments from covered companies and industry representatives requesting clarification regarding resolution plan filing requirements for 2019 and 2020. On July 26, 2019, the agencies informed (1) covered companies with resolution plans due in December 2019 that their next resolution plan submission dates were extended to July 1, 2021 or such other date that may be specified when the agencies adopt the final rule and (2) Barclays PLC, Credit Suisse, Deutsche Bank AG, and UBS AG that the informational requirements for their July 2020 resolution plans may be limited to changes they have made to their 2018 resolution plans to address shortcomings identified in those resolution plans, and they are required to submit their next full resolution plans on July 1, 2021 or such other date that may be specified when the agencies adopt the final rule.^[12]

Comments Related to the Corporation's IDI Rule

The agencies received several comments asserting that the filing cycle or resolution plan content requirements under the final rule should align with the requirements under the Corporation's rule requiring certain insured depository institutions to submit resolution plans (the IDI rule).^[13] Some commenters also asserted that firms should be able to incorporate by reference information included in a resolution plan submitted pursuant to the IDI rule into a resolution plan submitted pursuant to the final rule. A commenter stated that the agencies should harmonize the informational content requirements for resolution plans under the final rule with resolution plans under the IDI rule for filers subject to Category III standards, and that doing so would permit these filers to focus their resolution planning efforts on a uniform resolution plan filing process.

The agencies have not modified the proposal on the basis of these comments. The agencies note that the final rule and the IDI rule are separate requirements with different purposes and goals, and that the IDI rule is administered by only the Corporation. In part because a resolution plan submitted pursuant to the IDI rule is submitted to only the Corporation, incorporating by reference such information into a resolution plan submitted pursuant to the final rule is more challenging than incorporation by reference of such information into a resolution plan submitted pursuant to the IDI rule. The agencies note that the Corporation has issued an advanced notice of proposed rulemaking regarding the IDI rule. That advanced notice of proposed rulemaking notes, “[t]o promote efficiency and reduce burden, the [Corporation] is encouraging the use of incorporation by reference to [resolution plan submissions required under section 165(d) of the Dodd-Frank Act] where practicable.” ^[14] As the Corporation works to amend the IDI rule, the Corporation will seek to reduce unnecessary duplication between the IDI rule and the final rule.

Firms Subject to Resolution Planning Requirements

The agencies received several comments regarding the Board's proposed scope of application for the resolution planning requirement. Certain commenters supported the Board's proposal to rely on the risk-based indicators to identify those firms with $100 billion or more and less than $250 billion in total consolidated assets that would remain subject to resolution planning requirements under the final rule. However, some commenters recommended changes to the manner in which the risk-based indicators were proposed to be calculated or recommended that the Board further narrow the scope of coverage of the resolution planning requirement. Conversely, some commenters asserted that the proposed scope of coverage should be expanded so that more firms would be subject to the resolution planning requirement.

Filing Cycle

The agencies received comments in support of and opposed to the proposed filing cycle. Some commenters asserted that a less-than-annual requirement would allow sufficient time for covered companies to integrate firm-specific feedback, while other commenters raised concerns that significant changes to resolvability could occur between less frequent resolution plan submissions. Some commenters asserted that covered companies generally begin to prepare their resolution plans at least one year prior to submission and recommended related changes to the proposed filing cycle to enhance the predictability of the timing of producing a resolution plan. For example, these commenters asserted that the final rule should include a formal timeline for the agencies to provide firm-specific feedback to covered companies within one year following a resolution plan submission and advanced notice requirements when the agencies require submission of a full resolution plan or an interim update, or alter resolution plan submission dates.

Informational Content

Several commenters asserted that the proposal should further tailor informational content requirements among different categories and types of covered companies. Some of these commenters also expressed concern that certain covered companies within a category would have general guidance directed to them that is not appropriate for their category. Certain other commenters asserted that the proposed targeted resolution plans and reduced resolution plans would contain inadequate information. Some commenters supported the inclusion of a process by which covered companies would be able to request waivers from certain informational content requirements for their full resolution plans and asserted that it would help to streamline resolution plan submissions. However, some other commenters opposed the proposed firm-initiated waiver request process and asserted that it was unnecessary or would be subject to abuse by covered companies.

Critical Operations

Numerous commenters asserted that the proposed timeline for identification and de-identification of a critical operation should be modified to provide covered companies with additional notice of new identifications prior to a resolution plan submission date. Some commenters asserted that the final rule should automatically exempt from the requirement to have a process for identifying critical operations any covered company that does not currently have an identified critical operation.

The comments on the proposed rule and the agencies' related responses are discussed in further detail below.

III. Final Rule

A. Identification of Firms Subject to the Resolution Planning Requirement and Filing Groups

1. Firms Subject to the Resolution Planning Requirement

Following EGRRCPA, three types of firms are statutorily subject to the resolution planning requirement:

• U.S. and foreign banking organizations with $250 billion or more in total consolidated assets,
• U.S. banking organizations identified as U.S. GSIBs, and
• Any designated nonbank financial companies that the Council has determined under section 113 of the Dodd-Frank Act should be supervised by the Board.

As discussed in the proposal, following EGRRCPA, the Board has the authority to apply the resolution planning requirement to firms with $100 billion or more and less than $250 billion in total consolidated assets.^[15] In the proposal, the Board proposed to apply the risk-based indicators established in the notices of proposed rulemaking for the tailoring rules to identify those U.S. firms with total consolidated assets equal to $100 billion or more and less than $250 billion that would be subject to a resolution planning requirement. Consistent with the notices of proposed rulemaking for the domestic tailoring rule, the Board proposed to apply resolution planning requirements to U.S. bank holding companies with (a) total consolidated assets equal to $100 billion or more and less than $250 billion and (b) $75 billion or more in any of the following risk-based indicators: Cross-jurisdictional activity, nonbank assets, weighted short-term wholesale funding, or off-balance sheet exposure. Consistent with the notices of proposed rulemaking for the FBO tailoring rule, the Board proposed to apply resolution planning requirements to foreign banking organizations ^[16] with (a) total global assets equal to $100 billion or more and less than $250 billion, (b) combined U.S. assets equal to $100 billion or more, and (c) $75 billion or more in any of the risk-based indicators measured based on combined U.S. operations. In addition, the agencies proposed to use the risk-based indicators to divide U.S. and foreign firms into groups for the purposes of determining the frequency and informational content of resolution plan filings.

Foreign banking organizations that are expected to be triennial reduced filers

Agricultural Bank of China

Australia and New Zealand Banking Group

Banco Bradesco

Banco De Sabadell

Banco Do Brasil

Banco Santander

Bank of China

Bank of Communications

Bank of Montreal

Bank of Nova Scotia

Bayerische Landesbank

BBVA Compass

BNP Paribas

BPCE Group

Caisse Federale de Credit Mutuel

Canadian Imperial Bank of Commerce

China Construction Bank Corporation

China Merchants Bank

CITIC Group Corporation

Commerzbank

Commonwealth Bank of Australia

Cooperative Rabobank

Credit Agricole Corporate and Investment Bank

DNB Bank

DZ Bank

Erste Group Bank AG

Hana Financial Group

Industrial and Commercial Bank of China

Industrial Bank of Korea

Intesa Sanpaolo

Itau Unibanco

KB Financial Group

KBC Bank

Landesbank Baden-Weurttemberg

Lloyds Banking Group

National Agricultural Cooperative Federation

National Australia Bank

Nordea Group

Norinchukin Bank

Oversea-Chinese Banking Corporation

Shinhan Bank

Skandinaviska Enskilda Banken

Societe Generale

Standard Chartered Bank

State Bank of India

Sumitomo Mitsui Financial Group

Sumitomo Mitsui Trust Holdings

Svenska Handelsbanken

Swedbank

UniCredit Bank

United Overseas Bank

Westpac Banking Corporation

Woori Bank

In the proposal, the Board noted that the thresholds and risk-based indicators identified in the categories were designed to take into account an individual firm's particular activities and organizational footprint that may present significant challenges to an orderly resolution. The Board proposed to apply a uniform threshold of $75 billion for each of these risk-based indicators, based on the degree of concentration this amount would represent for each firm and the proportion of the risk factor among all U.S. firms with $100 billion or more in total consolidated assets that would be included by the threshold.

In the proposal, the Board noted that increased levels of cross-jurisdictional activity could increase operational complexity and that it may be more difficult to resolve or unwind a firm's positions due to the multiple jurisdictions and regulatory authorities involved and potential legal or regulatory barriers to transferring financial resources across borders. Similarly, the Board noted that bank holding companies with significant nonbank assets would be more likely to be engaged in activities such as prime brokerage, or complex derivatives and capital markets activities. Where a firm has not engaged in planning to address these particular challenges, it is less likely the firm's resolution would proceed in an orderly manner without unduly impacting other firms. Regarding weighted short-term wholesale funding, the Board noted that firms particularly reliant on short-term funding sources may be more vulnerable to large-scale funding runs or “fire sale” effects on asset prices and therefore proposed to continue to apply resolution planning requirements to firms with higher levels of potential liquidity vulnerability, as measured by the firm's weighted short-term wholesale funding. Finally, the Board noted that where a firm's activities result in large off-balance sheet exposure, the firm may be more vulnerable to significant draws on capital and liquidity in times of stress. The proposal therefore would have continued to apply resolution planning requirements to firms with this risk-based indicator.

The agencies received several comments on the use of the four risk-based indicators and associated thresholds.^[22] One commenter reiterated concerns that it described in its comment letter on the notices of proposed rulemaking for the tailoring rules and stated that its concerns regarding those notices applied equally to the proposed rule. Another commenter expressed general support for the risk-based indicator approach. Several commenters recommended changes to the calibration of U.S. assets and activity in the risk-based indicators for foreign banking organizations. One commenter argued against the inclusion of U.S. branches and agencies in the calculation of a foreign firm's combined U.S. assets or thresholds for risk-based indicators unless the operations of branches or agencies are significant to a critical operation. Instead, the commenter recommended that risk-based indicators be calculated consistent with how the strategic analysis requirements in the 2011 rule apply to U.S. branches, agencies, and offices. Another commenter argued against the use of U.S. branch assets in determining activity in risk-based indicators because branches are discrete entities from the U.S. intermediate holding companies and often have more stable funding.

The resolution planning requirement currently applies to a foreign banking organization's entire U.S. operations, including U.S. branches and agencies. U.S. branches and agencies constitute a significant share of these foreign banking organizations' presence in the United States. In addition, the agencies' experience reviewing resolution plans demonstrates that there are interconnections and dependencies between a foreign firm's U.S. branches, agencies, and offices and its U.S. subsidiaries, core business lines, and critical operations. The commenters' proposals to exclude certain U.S. branches, agencies, and offices from the calculation of the risk-based indicators or combined U.S. operations would not be consistent with the objective of measuring the full scope of potential risks to U.S. financial stability, including risks associated with operational complexity. Moreover, it is appropriate to tailor resolution planning requirements based on the size and complexity of a foreign firm's entire U.S. operations because the resolution planning requirement applies to a firm's entire U.S. operations. Accordingly, under the final rule, risk-based indicators and combined U.S. operations would be measured as proposed, including a foreign firm's U.S. branches, agencies, and offices.

Two commenters expressed concerns with the use of asset thresholds to determine a firm's category unless the asset threshold is indexed to inflation or total U.S. banking assets. As further explained in the notices of final rulemaking for the tailoring rules, the $100 billion and $250 billion size thresholds prescribed in the Dodd-Frank Act, as amended by EGRRCPA, are fixed by statute.^[23] Indexing the other thresholds would add complexity, a degree of uncertainty, and potential discontinuity to the framework. The Board acknowledges the thresholds should be reevaluated over time to ensure they appropriately reflect growth on a macroeconomic and industry-wide basis, as well as to continue to support the objectives of the final rule. The Board plans to accomplish this by periodically reviewing the thresholds under the tailoring rules and proposing changes through notice and comment process, rather than including an automatic adjustment of thresholds based on indexing.

Several commenters discussed the criteria for being subject to Category II standards. Two commenters supported the calibration of these criteria as proposed and asserted that no additional risk-based indicators should be used to determine whether a firm would be subject to Category II standards. These commenters opposed the use of additional risk-based indicators (e.g., weighted short-term wholesale funding, nonbank assets, or off balance-sheet exposure) and stated that such indicators would only be appropriate if the threshold were set to $210 billion. Another commenter stated that the criteria for being subject to Category II standards should not be based on exceeding the threshold for cross-jurisdictional activity only.

As further explained in the notices of final rulemaking for the tailoring rules, significant cross-border activity can indicate heightened interconnectivity and operational complexity. Cross-jurisdictional activity can add operational complexity in normal times and complicate the ability of a firm to undergo an orderly resolution in times of stress, generating risks to financial stability in the United States. In addition, cross-jurisdictional activity may present increased challenges in resolution because there could be legal or regulatory restrictions that prevent the transfer of financial resources across borders where multiple jurisdictions and regulatory authorities are involved. The cross-jurisdictional activity indicator and threshold is intended to identify firms with significant cross-border activities. Accordingly, the tailoring rules apply Category II standards to domestic and foreign banking organizations with cross-jurisdictional activity of $75 billion or more.

Alternative Scoping and Tailoring Criteria

In the proposal, the Board also proposed an alternative approach for assessing the risk profile and systemic footprint of a U.S. banking organization and of a foreign banking organization's combined U.S. operations or U.S. intermediate holding company: Using a single, comprehensive score. The Board uses an identification methodology (scoring methodology) to identify a U.S. bank holding company as a U.S. GSIB and apply risk-based capital surcharges to these firms. The Board proposed using the same scoring methodology to determine whether to apply the resolution planning requirements to firms with $100 billion or more and less than $250 billion in total consolidated assets.^[24] The agencies also proposed using this same scoring methodology to divide U.S. and foreign firms into groups to determine the frequency and informational content of resolution plan filings.

One commenter directed agency staff to comments on the alternative scoping criteria in relation to the notices of proposed rulemaking for the tailoring rules. The comment generally expressed support for the risk-based indicator methodology rather than the alternative methodology, which the commenter described as flawed conceptually and in calibration.

Under the tailoring rules, the Board finalized an indicators-based approach for applying Category II, III, or IV standards to the firms, as this approach provides a simple framework that supports the objectives of risk sensitivity and transparency. To determine whether a firm with total consolidated assets equal to $100 billion or more and less than $250 billion is subject to resolution planning requirements, the Board is finalizing the same indicators-based approach, requiring any such firm that is subject to Category II or III standards to submit resolution plans. As under the proposal, and as further described below, the agencies are similarly finalizing the indicators-based approach for determining the scope of resolution planning requirements for firms other than the U.S. GSIBs and nonbank financial companies supervised by the Board. The Board will continue to use the scoring methodology to apply Category I standards to a U.S. GSIB and, as under the proposal, the final rule relies on this identification for determining the scope of resolution planning requirements for these firms.

U.S. Covered Companies With $100 Billion or More and Less Than $250 Billion in Total Consolidated Assets

Under the proposed rule, resolution planning requirements would not have applied to U.S. firms with total consolidated assets of $100 billion or more and less than $250 billion whose activities did not exceed the threshold for any of the risk-based indicators (i.e., cross-jurisdictional activity, nonbank assets, weighted short-term wholesale funding, or off-balance-sheet exposure). In the proposal, the Board noted that it was less likely that one of these firms' failure would present a risk of serious adverse effects on U.S. financial stability and that requiring a plan for rapid and orderly resolution in bankruptcy from such a firm may impose burden without sufficient corresponding benefit.

The Board received several comments on this aspect of the proposal. One commenter expressed support for not applying the resolution planning requirements to U.S. firms subject to Category IV standards. Other commenters stated that the Board should apply resolution planning requirements to all firms with $100 billion or more and less than $250 billion in total consolidated assets. A further commenter expressed concern that the proposal would not apply resolution planning requirements to any firm with less than $250 billion in total consolidated assets. The commenter asserted that, instead, resolution planning should be required for all firms with more than $100 billion in total consolidated assets because the Corporation's resolution authority under the Federal Deposit Insurance Act does not extend beyond a covered company's insured depository institution subsidiary, and that the resolution plan process under the final rule should be coordinated with the IDI rule. Another commenter expressed concerns about removing the resolution planning requirements for large regional banks, asserting that the agencies did not explain sufficiently the rationale for removing the requirement for U.S. firms subject to Category IV standards.

The Board is finalizing this aspect of the proposal as proposed. In response to comments on this aspect of the final rule, the Board notes that the proposal and final rule would continue to apply resolution planning requirements to some firms with $100 billion or more and less than $250 billion in total consolidated assets.^[25] As explained above, the final rule relies on the risk-based indicators to apply resolution planning requirements to firms in this group. The Board believes the risk-based indicators are an effective means for identifying those firms with total consolidated assets of $100 billion or more and less than $250 billion whose material financial distress or failure would pose a threat to U.S. financial stability, for the reasons described above, in the proposal, and in the proposed and final tailoring rules. Where a firm's activities in one or more of the risk-based indicators exceed the $75 billion threshold, it is more likely that its failure could adversely affect U.S. financial stability; accordingly, the firm should be subject to resolution planning requirements. However, when a firm's activities do not exceed one or more of the risk-based indicators and its total consolidated assets are less than $250 billion, it is less likely that the firm's failure would have serious adverse effects on U.S. financial stability and, accordingly, to impose resolution planning requirements on such a firm would not yield a sufficient corresponding benefit.

Foreign-Based Covered Companies With $100 Billion or More and Less Than $250 Billion in Total Global Assets

In the proposal, the Board proposed applying resolution planning requirements to foreign banking organizations with (a) total global assets equal to $100 billion or more and less than $250 billion, (b) combined U.S. assets equal to $100 billion or more, and (c) $75 billion or more in any of the following risk-based indicators measured based on combined U.S. operations: Cross-jurisdictional activity, nonbank assets, weighted short-term wholesale funding, or off-balance-sheet exposure. The Board noted in the proposal that it would no longer require resolution plan submissions from foreign banking organizations with total global assets equal to $100 billion or more and less than $250 billion where (a) the firm has combined U.S. assets below $100 billion or (b) the firm does not have $75 billion or more in any of the risk-based indicators measured based on combined U.S. operations.

One commenter asserted that resolution planning requirements should be eliminated entirely for foreign firms with limited U.S. operations, regardless of their total global asset size, or, in the alternative, resolution planning requirements should apply to a foreign firm subject to Category IV standards only if it is a global systemically important financial institution. The commenter asserted that foreign firms should also be permitted to comply with resolution planning requirements pursuant to the final rule by certifying compliance with the home country resolution requirements.

The Board is finalizing this aspect of the proposal as proposed. The Board notes that the Dodd-Frank Act, as amended by EGRRCPA, requires all foreign banking organizations with $250 billion or more in total global assets to submit resolution plans, and a certification of home country compliance by itself would not satisfy this statutory standard. Moreover, as explained above, the Board believes that the risk-based indicators are an effective means for identifying those firms that should be subject to resolution planning requirements due to the potential effect on U.S. financial stability of their financial distress or failure.

Exiting Covered Company Status

The proposal would have updated the methodology for ascertaining when a firm ceased to be a covered company. With respect to a decrease in assets, under the proposal, a U.S. firm would have ceased to be a covered company when its total consolidated assets are less than $250 billion based on total consolidated assets for each of the four most recent calendar quarters (and it is not otherwise subject to Category II or Category III standards based on the risk-based indicators identified above). A foreign banking organization that files quarterly reports on Form FR Y-7Q similarly would have been assessed on the basis of its total global assets for each of the four most recent calendar quarters. A foreign banking organization that files the Y-7Q report annually rather than quarterly would have been assessed based on its total global assets over two consecutive years. The agencies would have retained the discretion to jointly determine that a firm is no longer a covered company at an earlier time than it would be pursuant to its quarterly or annual reports. Under the proposal, firms that would have ceased to be, or to be treated as, bank holding companies or that were de-designated by the Council for supervision by the Board would no longer have been covered companies and would not have had any further resolution planning requirements as of the effective date of the applicable action unless there were a subsequent change to their status. The agencies received no comments on this aspect of the proposal and are finalizing it as proposed, but have clarified in the final rule that a firm's total consolidated assets are determined on the basis of total consolidated assets as reported on each of its four most recent quarterly reports or two most recent annual reports.

2. Filing Groups and Filing Cycle

The proposal would have divided covered companies into three groups of filers: (a) Biennial filers; (b) triennial full filers; and (c) triennial reduced filers. Under the proposal, all covered companies would have had a July 1 submission date, instead of the current division between July 1 and December 31.

The agencies received comments offering general support for the longer filing cycle and asserting that it would allow filers sufficient time to consider firm-specific feedback. The agencies also received comments suggesting that the current annual filing requirement be retained to reflect the potential for rapid changes to firms' structure and financial condition that may cause resolution plans to become outdated.

The agencies note that the annual submission requirement has been a challenging constraint for both the firms and the agencies. The annual requirement did not provide sufficient time for the agencies to review the resolution plans and develop useful firm-specific feedback or general guidance, and for the firms to consider that firm-specific feedback or general guidance in their next resolution plan submissions. Independent of the proposal, the agencies have extended the resolution plan filing deadlines over the past few submission cycles to provide at least two years between resolution plan submissions. Accordingly, the agencies are finalizing an extended filing cycle, consistent with the proposal and described in more detail below.

The agencies received one comment regarding the proposal to move the submission date to July 1 for all filers. The commenter suggested that the 2011 rule's December 31 submission date be retained for triennial full filers subject to Category III standards as this would allow more efficient allocation of resources for resolution planning and other supervisory activities. The agencies are finalizing the July 1 submission date as proposed. Having one resolution plan submission date will simplify administration of the final rule for filers and the agencies, such as when filers change filing groups.

Biennial Filers

In the proposal, the biennial filers would have comprised firms subject to Category I standards, or the U.S. GSIBs, as well as any nonbank financial company supervised by the Board that has not been jointly designated as a triennial full filer by the agencies. The agencies noted that any such designation of a nonbank financial company would be made taking into account the relevant facts and circumstances, including the degree of systemic risk posed by the particular covered company's failure.

Since the failure of a firm in this group would pose the most serious threat to U.S. financial stability, the proposal would have applied the most stringent resolution planning requirements to biennial filers in terms of both submission frequency and informational content. Under the proposed rule, the biennial filers would have been required to submit a resolution plan every two years, alternating between a full resolution plan, subject to the waiver option, and a targeted resolution plan. The agencies noted that the U.S. GSIBs' resolution plans had matured over time and these firms had taken meaningful steps to develop the foundational capabilities necessary for the implementation of their resolution strategies. In addition, in recent years, the agencies have provided extensions under the 2011 rule to provide the biennial filers with two years between resolution plan submissions, so formalization of a two-year cycle would be consistent with established practice.

The agencies received two comments on this aspect of the proposal. One commenter stated that the U.S. GSIBs should be required to submit full resolution plans every two years. Another commenter expressed general opposition to the two-year cycle and asserted that it would be insufficient to capture important information about firms' resolvability due to the speed with which changes can occur.

The agencies are finalizing this aspect of the proposal as proposed. After several rounds of resolution plans, firm-specific feedback, and general guidance, the U.S. GSIBs' resolution plans have matured over time, making more frequent submissions generally unnecessary. In addition, experience under the 2011 rule has shown that an annual resolution plan submission schedule is too challenging a constraint for the reasons described above. The agencies note, however, that they retain the ability under the final rule to obtain key information between resolution plan submissions, including by requiring interim updates and receiving notices of extraordinary events, which will allow the agencies to remain informed of material developments affecting resolvability notwithstanding the less frequent filing cycle. The agencies also will have authority to require a full resolution plan instead of a targeted resolution plan and to move a resolution plan submission date.

Triennial Full Filers

The proposal identified the second filing group, triennial full filers, as firms subject to Category II or III standards under the notices of proposed rulemaking for the tailoring rules, as well as any nonbank financial company supervised by the Board that was designated as a triennial full filer by the agencies.

The agencies proposed that triennial full filers be on a three-year filing cycle rather than a two-year filing cycle because the failure of a triennial full filer would generally be less likely to pose a threat to U.S. financial stability as compared to the failure of a biennial filer. The proposal would have required triennial full filers to submit a resolution plan every three years, alternating between a full resolution plan and a targeted resolution plan.

The agencies received several comments on the proposed three-year filing cycle for triennial full filers. One commenter expressed support for the proposed three-year cycle, and alternating between full and targeted resolution plans for firms subject to Category III standards. Another commenter stated that these firms should be on a biennial schedule, alternating between full and targeted resolution plans. One commenter expressed general opposition to the three-year cycle and asserted that it would be insufficient to capture important information about firms' resolvability due to the speed at which change can occur. Another commenter stated that firms that would be triennial full filers under the proposal should be allowed to submit targeted resolution plans every three years, absent an extraordinary event.

The agencies are finalizing as proposed the three-year cycle for triennial full filers, alternating between full and targeted resolution plans. While the failure of a firm in this group could threaten U.S. financial stability, such failure is less likely to threaten U.S. financial stability as compared to the failure of a biennial filer. Accordingly, it is appropriate to tailor this group's requirements relative to the requirements for biennial filers. Given these firms' size and complexity, the agencies have determined that a triennial schedule is appropriate. In addition, as with biennial filers, the agencies would retain authority to require interim updates and full resolution plans, and to move resolution plan submission dates, and firms would be required to submit notices of extraordinary events, which would allow the agencies to remain informed of material developments affecting resolvability that occur between resolution plan submissions.

The agencies are not adopting commenters' recommendation to limit all resolution plan submissions from triennial full filers to targeted resolution plans absent an extraordinary event because the agencies believe that, given the potential risks inherent in firms in this group and because firms and markets change over time, it is appropriate for these firms to submit a full resolution plan at least every six years. In addition, the agencies note that a firm may apply for a waiver from certain informational content requirements in its full resolution plan and incorporate by reference information in a prior submission that remains accurate in all respects that is material to the covered company's resolution plan, as described further below. These aspects of the final rule should appropriately tailor the burden of preparing a full resolution plan.

In the proposal, the agencies also noted that the proposed triennial full filer group would have included foreign banking organizations that had previously received detailed general guidance from the agencies.^[26] These firms have taken important steps to enhance their resolvability and facilitate their orderly resolution in bankruptcy and have significantly reduced the size and risk profiles of their U.S. operations since the passage of the Dodd-Frank Act and in response to the implementation of Regulation YY,^[27] although the failure of one of these firms could potentially pose a threat to U.S. financial stability. The agencies stated that it was appropriate that these firms be part of the triennial full filer group and submit resolution plans on the three-year filing cycle because the preferred outcome for each of these foreign banking organizations is a successful home country resolution using a single point of entry resolution strategy, not the resolution strategy described in its U.S. resolution plan.

The agencies received one comment on this aspect of the proposal. The commenter asserted that the largest and most complex foreign banking organizations should submit resolution plans every two years, alternating between full and targeted resolution plans, because they pose similar risks to the U.S. financial system as the risks posed by the U.S. GSIBs. The commenter also stated that the rationale that these firms would be resolved through a home country single point of entry strategy was not compelling because the purpose of the resolution planning requirement is to plan for the failure of a U.S. entity.

The agencies note that the U.S. footprints of the larger and more complex foreign banking organizations are significantly smaller than those of, and do not present the same complexities as, the U.S. GSIBs. Consequently, while the failure of these operations may threaten the U.S. financial system, it is less likely than the failure of a U.S. GSIB, regardless of whether the global firm executes its preferred resolution strategy successfully. Accordingly, the agencies believe that a longer filing cycle is appropriate for these firms and are finalizing this aspect of the proposal as proposed.

Triennial Reduced Filers

The proposal identified a third group, triennial reduced filers, which would have consisted of any covered company that was not subject to Category I, II, or III standards and was not a nonbank financial company supervised by the Board. The proposal would have applied less stringent resolution planning requirements to firms in this group because they do not have the same size or complexity as firms that would have been subject to Category I, II, or III standards. Under the proposal, triennial reduced filers would have been required to submit reduced resolution plans every three years. The proposal also would have required a new triennial reduced filer to submit a full resolution plan as its initial submission and thereafter a reduced resolution plan every three years.

The agencies received one comment on this aspect of the proposal. The commenter asserted that some of the larger triennial reduced filers should be on a biennial schedule, alternating between full and targeted resolution plans, and supported applying a longer filing cycle to the U.S. operations of certain smaller foreign firms.

The agencies are finalizing the triennial reduced filer group and related filing cycle as proposed. Given the limited scope of these firms' U.S. operations and activities, the agencies have determined that it is appropriate for triennial reduced filers to submit reduced resolution plans on a three-year cycle; this requirement will appropriately tailor burden for these firms while ensuring that the agencies remain apprised of changes that could materially affect the firms' resolvability or resolution strategies. In addition, the failure of the U.S. operations of one of these firms may threaten the U.S. financial system, but failure of these operations poses a lower risk than the failure of a biennial filer or triennial full filer. Nonetheless, the agencies retain the ability to obtain additional information between resolution plan submissions, as mentioned above, and to require any firm to submit a full resolution plan, as described below.

Moving Submission Dates, Changing Plan Content, and Requiring Interim Updates

The proposal would have provided the agencies the flexibility to move covered companies' submission dates. The proposal would have required the agencies to notify a covered company that had previously submitted a resolution plan at least 180 days prior to the new submission date. A new covered company would have received at least 12 months' notice prior to the new submission date. Consistent with the 2011 rule, the proposal also would have allowed agencies to require covered companies to provide interim updates within a reasonable amount of time. In addition, the proposal would have allowed the agencies to jointly require that a covered company submit a full resolution plan within a reasonable period of time.

The agencies received several comments on these aspects of the proposal. Commenters asserted that the final rule should provide a minimum of 12 months' notice prior to requiring a full resolution plan or an off-cycle submission and six or 12 months' notice prior to an interim update. Commenters also asserted that the agencies should clarify that a “reasonable amount of time” for prior notice of a full resolution plan submission would be at least 12 months' notice. These commenters generally asserted that their proposed notice periods are necessary to provide covered companies with sufficient time to prepare their resolution plans.

The final rule contains certain changes from the proposal in response to these commenters. Under the final rule, the agencies will provide at least 12 months' notice prior to requiring a full resolution plan submission or an off-cycle submission (i.e., a submission on a date other than the regularly scheduled date for the covered company's filing group).^[28] The agencies believe that these changes will enhance the predictability of resolution plan submission dates, provide appropriate time for resolution plan preparation, and help facilitate covered companies' resource allocation decisions.

Consistent with the proposal and the 2011 rule, the final rule provides that the agencies may require a covered company to submit an interim update within a reasonable amount of time, as jointly determined by the agencies. An interim update is intended to be a flexible tool for the agencies to obtain information between resolution plan submission dates. When requiring an interim update, the agencies will specify the portions or aspects of a previously submitted resolution plan that a firm is required to update. Accordingly, the informational content requirements for an interim update are not fixed, making it difficult to identify a specific period that is necessary to prepare every interim update. While a six- or 12-month period may be appropriate in certain circumstances, a shorter time period may be appropriate in other circumstances, especially where an interim update would contain only limited information. Accordingly, the agencies do not believe that it would be appropriate to introduce a fixed notice period for an interim update.

The final rule provides that the agencies may require a covered company to submit a full resolution plan instead of a targeted or reduced resolution plan that the covered company is otherwise required to submit. The full resolution plan's submission date will be the submission date for the replaced targeted or reduced resolution plan.^[29] The submission of such a full resolution plan will not change the type of resolution plan that the covered company is otherwise thereafter required to submit.

The agencies do not expect to regularly exercise this authority. However, it may be necessary to require a full resolution plan instead of a targeted or reduced resolution plan under unusual circumstances, and the agencies have preserved this authority as a means for the agencies to receive additional information from firms when appropriate. The agencies could, for example, exercise their discretion to require a triennial reduced filer whose activities have evolved gradually (rather than as the result of a single material event) to submit full resolution plan in lieu of a reduced resolution plan if the aggregate effect of those changes might meaningfully increase the risk that the firm's failure could have serious adverse effects on U.S. financial stability.

B. Resolution Plan Content

1. General Guidance and Firm-Specific Feedback

The preamble to the proposal specified that general guidance previously directed to specific full resolution plan filers concerning the content of their upcoming submissions would continue to be directed to those individual firms.

The agencies received several comments related to prior resolution planning general guidance and firm-specific feedback. Some commenters suggested that existing resolution planning general guidance directed to some firms should be consolidated and tailored among the different categories of firms, that any future general guidance be subject to notice and public comment, and that the agencies commit to providing firm-specific feedback on resolution plans and any general guidance no later than 12 months prior to a covered company's resolution plan submission date. These commenters asserted in particular that covered companies subject to Category II or III standards should not receive general guidance that is similar to the general guidance that is directed to the U.S. GSIBs, which are subject to Category I standards. A few commenters suggested that the agencies clarify to whom existing general guidance is directed, and one commenter suggested incorporating existing general guidance into the final rule.

The final rule provides that, absent extenuating circumstances, the agencies will provide a firm with notice of any deficiency or shortcoming identified by the agencies and any other firm-specific feedback regarding its resolution plan no later than 12 months after the later of (1) the date when the firm submitted the resolution plan and (2) the date by which the firm was required to submit the resolution plan. The agencies recognize firms' strong interest in prompt firm-specific feedback from the agencies and in having sufficient time to respond thereto, and would expect to exercise their authority to provide such notice after the one-year period only when providing the notice within a year would be impractical due to circumstances outside the agencies' control. Absent extenuating circumstances, this approach will provide a firm with at least one year to consider any and all firm-specific feedback before it is next required to submit a resolution plan. However, the agencies would retain the authority to require a firm to submit within a shorter period a revised resolution plan that addresses deficiencies or an interim update.

In addition to firm-specific feedback that provides the agencies' views on a particular resolution plan,^[30] the agencies may continue to issue general guidance regarding future resolution plan submissions. The firm-specific feedback letters sent to-date to firms are examples of the firm-specific feedback that the agencies will provide to firms within the 12-month period described in the previous paragraph. While both firm-specific feedback (other than a notice of a deficiency) and general guidance are meant to assist firms in preparing future resolution plans, general guidance outlines the agencies' expectations or priorities and articulates the agencies' general views regarding resolution plans more generally than firm-specific feedback, which presents the agencies' views on a particular resolution plan. The agencies will strive to provide final general guidance at least a year before the next resolution plan submission date of firms to which the general guidance is directed.

Existing general guidance, including its content and scope, is not modified by the final rule. Accordingly, the detailed general guidance that certain foreign banking organizations have received from the agencies (FBO guidance) ^[31] continues to be directed to only those firms and is not directed to all triennial full filers as a result of the changes from the 2011 rule reflected in the final rule. Likewise, general guidance directed to certain domestic banking organizations (domestic guidance) ^[32] continues to be directed to only those domestic banking organizations to which it was directed prior to adoption of the final rule. Because general guidance sets forth non-binding expectations as opposed to rule-based requirements, the agencies do not believe that it is necessary or appropriate to incorporate all general guidance into the final rule.

The agencies sought and received public comment on the domestic guidance in 2018. The notice and comment process allowed the agencies to gain valuable insight, which led to improvements and clarifications in the final domestic guidance. Similar to the domestic guidance, the agencies intend to consolidate and request public comment in the near future on all aspects of the FBO guidance, including the informational content expectations and the subset of firms to which it is directed. The agencies expect that this process will lead to similar benefits for the FBO guidance. Similarly, the agencies intend to make any future general guidance concerning resolution planning available for public comment, and will endeavor to finalize any such general guidance at least one year prior to the submission date for the first resolution plan submission to which it would apply. The agencies will continue to provide firm-specific feedback on resolution plan submissions without first making that firm-specific feedback available for notice and comment.

2. Material Changes and Extraordinary Events

The proposal would have revised and clarified the requirements for filing a notice of material events to reflect the creation of a material changes definition. A material change would have been defined as any event, occurrence, change in conditions or circumstances, or other change that results in, or could reasonably be foreseen to have a material effect on the resolvability of the covered company, the covered company's resolution strategy, or how the covered company's resolution strategy is implemented. Full, targeted, and reduced resolution plans would have been required to include information about material changes since a covered company's previously submitted resolution plan and changes the covered company made to its resolution plan in response.

Because of the broad definition of “material change,” the agencies determined that a notice requirement triggered by the occurrence of a material change between resolution plan submissions was not appropriate and instead proposed the concept of an extraordinary event, which would have required such a notice. Under the proposed rule, a material merger, acquisition of assets or other similar transaction, or a fundamental change to a covered company's resolution strategy would have been an extraordinary event requiring notice to the agencies between resolution plan submissions.

One commenter supported the inclusion in the proposal of the terms “material change” and “extraordinary event,” while another commenter expressed concern that the proposal put too much reliance on firms self-identifying material changes.

The final rule includes the proposed provisions regarding “material changes” ^[33] and “extraordinary events,” with the clarification that a notice related to an extraordinary event must describe the event and explain how the event affects the resolvability of the firm. The agencies believe that firms can effectively identify these types of events, and note that the rule's requirement that the board of directors (or delegee in the case of a foreign firm) approve each resolution plan should help ensure that firms take appropriate steps to identify material changes. In addition, the final rule has been revised from the proposal to require that a firm affirmatively state in its resolution plan that no material change has occurred since its prior resolution plan submission if the resolution plan does not identify any material changes. The agencies believe that this clarification will further help to ensure that firms give due attention to the requirement to identify material changes.

3. Full Resolution Plans

The proposal would not have generally modified the components or informational content requirements of a full resolution plan. Through numerous resolution plan submissions, the agencies and firms have gained familiarity with the format and content of the information required to be submitted pursuant to the 2011 rule. The agencies also recognize the utility of the existing informational content requirements for full resolution plans. Focus on these items has facilitated resolution plan and resolvability improvements, particularly by the largest and most complex firms.

Several commenters suggested that the proposal tailor the full resolution plan informational content requirements between categories of firms, as well as among domestic and foreign firms based on their relative risk to U.S. financial stability. One commenter suggested that the contents of a full resolution plan should be further tailored for foreign firms, focus on critical operations in the United States, and include U.S. branches in the firm's strategic analysis only if they are significant to a critical operation. The commenter also suggested that the agencies should revise the definition of “covered company” to clarify that the strategy for a foreign firm need only focus on resolution of its U.S. core business lines, critical operations, and material entities. The commenter also suggested that the agencies confirm that foreign firms that have filed resolution plans under the 2011 rule will not be subject to requirements that impose greater burdens than applied previously, and that any new requirements be based on the occurrence of extraordinary events.

The agencies are not changing the informational content requirements of a full resolution plan in the final rule from the proposal, other than requiring an affirmation that no material change has occurred, if applicable. With respect to differentiation of requirements between domestic and foreign firms, section __.5(a) of the final rule appropriately distinguishes between informational content requirements for domestic firms and foreign firms by focusing foreign firms' resolution plans on information related to their U.S. operations, consistent with the 2011 rule. The agencies do not believe that it is appropriate to limit resolution plan content to operations that are related to a critical operation because the Dodd-Frank Act's resolution planning requirement requires firms to plan generally for their rapid and orderly resolution. Similarly, nothing in the Dodd-Frank Act suggests that branches should be categorically excluded as suggested. However, the agencies note that, consistent with the 2011 rule, the final rule limits the strategic analysis requirements relating to material entities that are subject to an insolvency regime other than the Bankruptcy Code (including branches) by allowing covered companies to exclude such entities from their strategic analysis unless the entities have $50 billion or more in total assets or conduct a critical operation. The agencies have found this limitation to appropriately capture the need for information about material entities that may affect U.S. financial stability and accordingly are retaining it under the final rule.

Although the informational content requirements for resolution plans are not differentiated among filing groups in the final rule, the firm-initiated waiver request process will enable further tailoring of the informational content requirements of full resolution plans based on the attributes and risks posed by a particular covered company and the content of firms' most recent submissions. In addition, the agencies will retain the authority to tailor informational content requirements through waivers on the agencies' own initiative and will continue to communicate their tailored expectations for individual firms' resolution plans through firm-specific feedback. Moreover, as explained in more detail below, under the final rule the firm-initiated waiver request process would be available only to triennial full filers and triennial reduced filers. As a result, the final rule would keep in place all informational content requirements for biennial filers' full resolution plans unless the agencies grant a waiver on their own initiative. As explained below, this change to the process for covered companies to request waivers reflects that among all categories of covered companies, biennial filers' material financial distress or failure would be most likely to pose risks to U.S. financial stability, so their full resolution plans should, as a general matter, be the most comprehensive. The agencies believe that this procedural change is also responsive to commenters' concerns about the degree of tailoring of informational content requirements between biennial filers and triennial full filers. Accordingly, the agencies believe that the final rule reflects appropriate tailoring of informational content among different categories of covered companies.

4. Waivers of Informational Content Requirements

The proposal would have continued to permit the agencies to waive certain informational content requirements for one or more firms on the agencies' joint initiative, given that through a covered company's repeated resolution plan submissions, certain aspects of its resolution plan may reach a steady state or become less material such that regular updates would not be useful to the agencies in their review of the resolution plan. The proposal also introduced a process whereby a covered company that had previously submitted a resolution plan would have been able to apply for a waiver of certain informational content requirements of a full resolution plan. Under the proposal, firms would have been able to submit one waiver request per filing cycle, which would have included a public section containing the requirements sought to be waived. These requests would have been required to be submitted at least 15 months before the submission date and include all information necessary to support the request. A waiver request would have been automatically granted on the date that was nine months prior to the submission date for the resolution plan to which it related if the agencies did not jointly deny the waiver prior to that date. The proposal would have enabled the agencies to deny a waiver in their discretion.

Several commenters supported the firm-initiated waiver request process, noting that the process would help streamline submissions and that automatically approving waivers unless jointly denied would ensure that requests would not be unduly delayed. One of those commenters suggested that the waiver should be made automatic for filers that qualified to submit tailored resolution plans under the 2011 rule, while others, as discussed above, generally contended that different categories of filers should be subject to different levels of resolution plan informational content requirements. Other commenters expressed concern that the firm-initiated waiver request process was unnecessary or would inappropriately reduce resolution plan content requirements, increase burden on the agencies, and be biased in favor of approval. One commenter suggested that waivers should be required to be approved by both agencies. This commenter was further concerned that the agencies could grant waivers for multiple submission cycles, effectively undermining the proposed rule's limit of one waiver request per submission cycle. Another commenter stated that providing for automatic approval of waivers when the agencies do not jointly deny them could result in the loss of important information based on the challenges of coordinating joint agency action.

The final rule retains both the agencies' ability to waive certain informational content requirements on their joint initiative and the firm-initiated waiver request process introduced in the proposal, with some modifications. In response to concerns raised about the firm-initiated waiver request process, and to suggestions that the agencies should take additional steps to tailor the informational content requirements between biennial filers and triennial full filers, the agencies have revised the process for covered companies to request waivers. The agencies have determined that the firm-initiated waiver process should not be extended to biennial filers in light of the additional risks that these firms present. Because the concerns noted above outweigh the advantages of a firm-initiated waiver process for biennial filers, the agencies are limiting firm-initiated waiver requests to triennial full filers and triennial reduced filers.^[34] As under the 2011 rule, the agencies have the authority to jointly waive one or more of the resolution plan requirements on their own initiative for any firm, including any biennial filer. This procedural change will help to address these commenters' concerns by ensuring that, absent the agencies granting a waiver on their own initiative, all full resolution plan informational content requirements will remain in place for biennial filers, whose material financial distress or failure would be most likely to pose a threat to U.S. financial stability.

The agencies believe that for triennial full filers and triennial reduced filers, waiver requests will be a useful means to tailor the informational content of resolution plans in a manner that will be both efficient for the agencies and transparent to the public and, accordingly, the final rule permits waiver requests from these firms.

Relative to the proposed rule, the final rule changes the procedure by which the agencies act on waiver requests. Under the proposal, a waiver request would have been automatically approved if the agencies did not jointly deny it before a certain date. Under the final rule, a waiver request is automatically denied if the agencies do not jointly approve it before a certain date. The agencies believe that this change from the proposal will be more consistent with other provisions of the final rule that require joint agency agreement. The agencies will nonetheless endeavor to respond to waiver requests in a timely manner.

Furthermore, safeguards are in place to ensure that firm-initiated waivers would not inappropriately reduce resolution plan content requirements or otherwise favor filers and that the firm-initiated waiver request process will not be unnecessarily burdensome for the agencies or inefficient. For example, firms can only request waivers for full resolution plans and firms can only submit one waiver request per full resolution plan submission. In addition, firm-initiated waivers are not permitted for some of the most critical informational content, including the core elements required for a targeted resolution plan, any information specifically required pursuant to section 165(d) of the Dodd-Frank Act, information about material changes, and information about deficiencies and shortcomings. Moreover, the timing for the agencies' processing of waiver requests has been structured to ensure that the agencies have sufficient opportunity to properly review and consider the requests.

This preamble describes below the kind of information that waiver requests should contain, which should help make the firm-initiated waiver request process more efficient and focused. Finally, notwithstanding the new firm-initiated waiver request process, the agencies have retained the ability under the final rule to obtain additional information in a timely manner through, for example, interim updates, notices of extraordinary events, and the ability to require off-cycle resolution plan submissions.

The agencies are also clarifying in the final rule that, while the agencies may waive requirements for one or more resolution plan submissions on their own initiative, firm-initiated waivers apply to the submission of only a single full resolution plan. The final rule also clarifies that the agencies may approve or deny a waiver request in whole or in part.

One commenter suggested changes to the firm-initiated waiver request process aimed at ensuring transparency and consistency in its application, including requirements that the agencies consider whether approved waivers should apply to similarly situated firms and that both the criteria used in waiver determinations and the agencies' waiver decisions be made public. To ensure transparency in the firm-initiated waiver request process, the agencies intend to make their decisions on waiver requests public, although the information made public may not be the complete response provided to a firm and would not include confidential information. The agencies also note that under the final rule they will be able to waive informational content requirements on their joint initiative, and they could elect to exercise this discretionary authority to waive informational content requirements for similarly situated firms if they deem it appropriate to do so. However, the final rule retains the agencies' ability to approve or deny waiver requests at their joint discretion. The proposal's preamble included clarifying examples of how the agencies expect to exercise this discretion to approve waivers in appropriate circumstances, and these examples also apply for the final rule. For example, a waiver may be appropriate to reduce informational content that would be of limited utility to the agencies, such as when the agencies have recently completed an in-depth review of a particular business line and are satisfied that they are in possession of current information relevant to a firm's ability to resolve that business line. More specifically, if the agencies have recently undertaken a comprehensive review of a firm's Payments, Clearing, and Settlement (PCS) activities, it may be appropriate to waive the requirement for that firm to submit information relevant to these activities in its next resolution plan submission. A waiver may also be appropriate for a firm that submitted a tailored resolution plan under the 2011 rule and requests a waiver that would limit the firm's required resolution plan content in a manner that is similar to the tailored resolution plan provisions. Additional circumstances may arise under the final rule where it is appropriate to grant or deny waivers, and the agencies believe it is therefore appropriate to maintain a flexible standard under the final rule.

A covered company should provide all information necessary to support its waiver request, including an explanation of why approval of the request would be appropriate, why the information for which a waiver is sought would not be relevant to the agencies' review of the firm's resolution plan, and confirmation that the request meets the eligibility requirements for a waiver under the final rule (i.e., that it is not a core element, not related to an identified deficiency that has not been adequately remedied, etc.). To ensure that the agencies have the information necessary to evaluate a waiver request, the final rule provides that covered companies would be required to explain why the information sought to be waived would not be relevant to the agencies' review of the covered company's next full resolution plan and why a waiver of the requirement would be appropriate. Failure to provide appropriate explanation or any information requested by the agencies in a timely manner could lead the agencies to deny a waiver request on the basis that insufficient explanation or a lack of information makes it impossible to determine that the information sought to be waived would not be relevant to their review of the resolution plan. A full resolution plan should specify content omitted due to a waiver request that was granted.

Two commenters suggested that the deadline for a waiver request to be jointly denied by the agencies should be moved from nine months to 12 months prior to the submission deadline to better align with filers' resolution plan preparation timelines. These commenters suggested that the rule should provide for waiver requests to be submitted 15 months prior to a full resolution plan submission date and allow the agencies 90 days within which to consider and act upon waiver requests, thereby reducing the time period for agency review from six months to 90 days.

The agencies recognize that a firm may require more than nine months to prepare a full resolution plan taking into account an approved waiver request. Therefore, the final rule provides that a waiver request is automatically denied on the date that is 12 months prior to the submission date for the resolution plan to which it related if the agencies do not jointly approve the waiver request prior to that date. However, the agencies continue to believe that a minimum of six months is the appropriate period for the agencies to review a waiver request. Accordingly, the final rule requires a waiver request to be submitted at least 18 months before the related resolution plan submission date. If the agencies waive informational content requirements for one or more firms on the agencies' own initiative, the agencies will endeavor to provide those firms with notice of the waiver at least 12 months before their next resolution plan submission date.

5. Targeted Resolution Plans

The proposal included a new type of resolution plan: A targeted resolution plan. The agencies proposed the targeted resolution plan to strike the appropriate balance between providing a means for the agencies to continue receiving updated information on structural or other changes that may impact a firm's resolution strategy while not requiring submission of information that remains largely unchanged since the previous submission. Under the proposed rule, the targeted resolution plan would have been a subset of a full resolution plan and would have included the following components: The information required to be included in a full resolution plan regarding capital, liquidity, and the covered company's plan for executing any recapitalization contemplated in its resolution plan, including updated quantitative financial information and analyses important to the execution of the covered company's resolution strategy (i.e., the core elements); a description of material changes since the covered company's previously submitted resolution plan and changes the covered company has made to its resolution plan in response; a description of changes in response to firm-specific feedback provided by the agencies, general guidance issued by the agencies, or legal or regulatory changes; a public section; and information responsive to targeted areas of interest identified by the agencies at least 12 months prior to the submission.

The agencies received several comments regarding the proposed targeted resolution plan. One commenter asserted that the agencies should further tailor the contents of the targeted resolution plan based on firms' structures, business models, and activities in the risk-based indicators and that the targeted resolution plan requirement should apply differently to foreign filers subject to Category II or III standards. Another commenter expressed concern that the targeted resolution plan did not include significant elements, such as booking and trading practices for derivatives, trading exposure limits, and relationships with counterparties, and that targeted resolution plans are untested. Another commenter expressed concerns that the proposal's requirement for biennial filers and triennial full filers to alternate between full and targeted resolution plans would not be sufficient to capture important information about resolvability given the speed with which firms can change. Another commenter suggested that the agencies clarify that targeted areas of interest identified by the agencies would not require information that is wider in scope or depth than the information required for a full resolution plan.

The agencies are finalizing the elements of the targeted resolution plan as proposed, other than requiring a firm to affirm that no material change has occurred, if applicable, and clarifying that a targeted information request will be made in writing.^[35] Regarding the request for further tailoring of the targeted resolution plan requirement, the targeted resolution plan is already tailored to capture the core elements and key informational content most critical to helping ensure orderly resolution in bankruptcy, and to the extent additional tailoring is needed, the agencies can provide it through agency-initiated waivers and targeted information requests. Accordingly, the agencies believe that the final rule will facilitate appropriate tailoring of informational content requirements. The agencies also note that they will continue to communicate their tailored expectations for resolution plan content through firm-specific feedback.

Regarding commenters' concerns that the targeted resolution plan does not include certain important elements, the agencies have found, based on their experience reviewing resolution plans, that the information that would be contained in the proposed targeted resolution plan is the information that is most important to assessing firms' resolvability, including the information that has the tendency to change with the most frequency. While information about other topic areas may be relevant to resolvability, the agencies believe it is appropriate to receive this other information on a less frequent basis through full resolution plan submissions. The agencies note that targeted resolution plans must also address material changes. Accordingly, a covered company that experiences material changes relating to, for example, its booking and trading practices for derivatives, trading exposure limits, relationships with counterparties, or other activities or characteristics, would be required to include such information in its targeted resolution plan. In addition, the agencies have designed the targeted resolution plan to ensure that they will receive important information that would allow them to review and evaluate potential problem areas, including by allowing the agencies to require firms to respond to targeted information requests, while permitting less frequent submission of information that may have a tendency to remain materially unchanged over time. The agencies' ability to make targeted information requests, require full resolution plan submissions and interim updates, move resolution plan submission dates, and receive notices of extraordinary events provides further means for the agencies to receive additional information from these firms.

Regarding one commenter's request for clarification in relation to the targeted information requests element of the targeted resolution plan, consistent with the proposal, the agencies note that a targeted resolution plan is a subset of a full resolution plan. Accordingly, the information to be provided regarding areas of focus within a targeted resolution plan would not require submission of information wider in scope than what a full resolution plan requires.

The agencies may, however, request information in greater depth than the firm chose to provide in prior submissions.

6. Reduced Resolution Plans

The proposal would have formalized the informational content requirements for the reduced resolution plan. For foreign banking organizations with relatively limited U.S. operations, the reduced resolution plan components were proposed to include: A description of (1) material changes experienced by the covered company since the filing of the covered company's previously submitted resolution plan and (2) changes to the strategic analysis that was presented in the firm's previously submitted resolution plan resulting from material changes, firm-specific feedback provided by the agencies, general guidance issued by the agencies, or legal or regulatory changes. Reduced resolution plans would also contain a public section. The agencies noted that receiving updates of this information would permit them to continue to monitor significant changes in a firm's structure or activities while appropriately focusing the informational components of these firms' resolution plans.

The agencies received several comments on the reduced resolution plan. One commenter suggested that reduced resolution plans would not provide the agencies sufficient information and that agencies may not be able to assess whether a change is material as a result of triennial reduced filers not filing full resolution plans after their initial submissions. Another commenter suggested that firms that had previously been resolution plan filers should not be required to submit a new full resolution plan upon once again becoming a covered company and a new triennial reduced filer. Another commenter suggested that the agencies clarify when triennial reduced filers would be required to submit full resolution plans under the final rule.

The agencies are finalizing the reduced resolution plan as proposed, other than requiring an affirmation that no material change has occurred, if applicable. Taking into account the relative degree of risk posed by these firms, the agencies believe that the reduced resolution plan as proposed generally would capture the information necessary for the agencies to assess triennial reduced filers' resolvability. The material change requirement in the reduced resolution plan is designed to capture important information relevant to the firm's resolvability, its resolution strategy, and implementation of the resolution strategy. In addition, and as discussed above, the final rule has been revised from the proposal to require that a firm affirmatively state in its resolution plan that no material change has occurred since its prior resolution plan submission if the resolution plan does not identify any material change. The agencies believe this clarification will further help to ensure that firms give due attention to the requirement to identify material changes. Finally, the agencies' ability to require full resolution plan submissions and interim updates, move resolution plan submission dates, and receive notices of extraordinary events provides further means for the agencies to receive additional information from triennial reduced filers.

The final rule also retains the requirement that any firm that was not a covered company on the effective date of the final rule but becomes a triennial reduced filer after the effective date of the final rule submit a full resolution plan as its initial submission, even if the firm was at some point previously subject to resolution planning requirements (e.g., under the 2011 rule). There could be an extended period of time between a firm's previous full resolution plan submission and the time when it again becomes subject to the final rule, rendering the earlier full resolution plan less relevant to the firm's current operations, activities, and structure. The agencies note, however, that a firm would be able to incorporate by reference information from its prior resolution plan that meets the final rule's standard for incorporation by reference. In addition, the agencies are clarifying that full resolution plans filed under the 2011 rule by firms that would continue to be covered companies under the final rule and would be triennial reduced filers under the final rule would be grandfathered for purposes of determining compliance with the requirement that a triennial reduced filer's initial submission be a full resolution plan. Accordingly, those firms would be required to submit reduced resolution plans going forward but would not be required to resubmit a new full resolution plan absent other relevant changes in their circumstances (e.g., becoming subject to Category II or Category III standards).

7. Tailored Resolution Plans

Under the 2011 rule, a tailored resolution plan was a means for certain bank-centric firms to request that their resolution plan submissions focus on nonbank activities that may pose challenges to executing the firm's resolution strategy. Pursuant to the 2011 rule's tailored resolution plan notice requirement, firms were required to apply to the agencies to submit a tailored resolution plan rather than a full resolution plan every year that a submission was required. The agencies' proposal would have eliminated the tailored resolution plan in light of the introduction of the firm-initiated waiver request process and the targeted resolution plan as effective substitutes. The agencies also noted in the proposal that many of the covered companies that were eligible under the 2011 rule to file a tailored resolution plan would no longer be subject to the resolution planning requirement under the final rule or would become triennial reduced filers.

One commenter expressed concern regarding the proposal to eliminate the tailored resolution plan. In particular, the commenter stated that previous tailored resolution plan filers should be grandfathered so that they would not need to apply for a waiver to continue to submit similar submissions under the final rule. As an alternative, the commenter proposed that the agencies limit the scope of these firms' full and targeted resolution plan submissions to nonbank operations. Another commenter asserted that the proposal should be modified to allow for automatic waiver, upon request, from certain informational content requirements for filers that qualified to submit tailored resolution plans under the 2011 rule.

The agencies are finalizing the proposal to eliminate the tailored resolution plan type. As explained in the proposal, the agencies expect that the firm-initiated waiver request process and targeted resolution plan requirements will be effective substitutes for the tailored resolution plan and will allow the agencies to appropriately tailor informational content requirements, taking into account the relative mix of banking and non-banking activities for particular filers. Accordingly, the agencies believe that it is unnecessary to retain the tailored resolution plan in the final rule.

C. Critical Operations Methodology and Reconsideration Process

Under the final rule, and consistent with the 2011 rule, a critical operation is an operation the failure or discontinuance of which would pose a threat to the financial stability of the United States. The 2011 rule provides for critical operations to be identified by the firms or at the agencies' joint direction. As part of their rule implementation and supervision efforts, the agencies have developed a process and methodology for jointly identifying critical operations and have made certain critical operations identifications. In recognition that financial markets and firms change over time, the agencies proposed establishing a periodic, comprehensive review of critical operations identifications by both the agencies and covered companies to ensure that resolution planning reflects current operations and markets and appropriately focuses on areas vital to financial stability.

1. Identification by Covered Companies and Methodology Requirement

Many covered companies have incorporated into their resolution planning frameworks a procedure for identifying critical operations, and the agencies proposed requiring biennial filers and triennial full filers to maintain a process for identifying critical operations on a scale that reflected the nature, size, complexity, and scope of their operations. The proposal would have required this process for self-identification to occur at least as frequently as a covered company's resolution plan submission cycle and be documented in the covered company's corporate governance policies and procedures. In addition, the proposal would have established a process whereby firms that did not currently have identified critical operations could request a waiver from the requirement to maintain a self-identification process and methodology. Firms that self-identified a critical operation would have been required to notify the agencies if they ceased to identify an operation as a critical operation. Finally, the agencies proposed a conforming definitional change.^[36]

Two commenters suggested that the agencies clarify that the requirement that firms have a process to self-identify critical operations is presumptively waived for any covered company that has previously submitted resolution plans and does not currently have an identified critical operation. Finally, one commenter recommended either eliminating or clarifying the use of the term “economic functions” in the agencies' description of a firm's methodology for identifying critical operations.

Consistent with the proposal, under the final rule, biennial filers and triennial full filers must establish and implement a process designed to identify their critical operations. However, after July 1, 2022, the final rule also requires a triennial reduced filer that has an identified critical operation to establish and implement a process designed to identify its critical operations. As under the proposal, in all cases, that process must contain a methodology and consider the nature, size, complexity, and scope of the covered company's operations.

Under the final rule, triennial reduced filers with identified critical operations will be required to establish and implement a process to identify critical operations, but only after they are required to submit their next resolution plans in 2022. Where a firm has an identified critical operation, it may be the case that it has additional critical operations such that a periodic review by the firm of its operations that is appropriate to the nature, size, complexity, and scope of its operations could be beneficial. This timing will provide the agencies the opportunity to complete their first joint review of critical operations under the final rule and triennial reduced filers with the opportunity to request reconsideration of any currently identified critical operation in anticipation of their next resolution plan submission.

Also consistent with the proposal, the final rule allows a covered company that has previously submitted a resolution plan and does not have an identified critical operation to request a waiver of the requirement to have a process and methodology to identify its critical operations if it does not have an identified critical operation as of the date the waiver request is submitted.^[37] Under the proposal, the covered company would have needed to apply for such a waiver at least 15 months before the submission date for that resolution plan, and waivers would have been automatically granted on the date that was nine months prior to the date that the resolution plan it relates to was due if the agencies did not jointly deny the waiver prior to that date.

Consistent with the changes to the firm-initiated waiver request process for informational content requirements, under the final rule, a request for a waiver from the critical operations process and methodology requirement will be automatically denied on a certain date unless the agencies have jointly approved it before that date. Requiring joint approval of waiver requests will be more consistent with other provisions of the final rule that require joint agency approval.

The agencies recognize that a firm may require more than nine months to prepare a resolution plan taking into account any critical operation the covered company newly identifies and, accordingly, a covered company may need to complete its process more than nine months before its next resolution plan is due. Therefore, the final rule provides that a waiver request is automatically denied on the date that is 12 months prior to the submission date for the resolution plan to which it related if the agencies do not jointly approve the waiver prior to that date. However, the agencies continue to believe that a minimum of six months is the appropriate period for the agencies to review a waiver request. Accordingly, the final rule requires a waiver request to be submitted at least 18 months before the submission date. This timing is consistent with the timing for firm-initiated waiver requests of informational content requirements under the final rule. However, to provide firms with an appropriate period to prepare a waiver request after the agencies' adoption of the final rule with respect to a resolution plan due on or before July 1, 2021, the final rule provides that a waiver request must be submitted at least 17 months before that submission date.

The proposal would have required a covered company to submit a waiver request with respect to each resolution plan submission. The agencies recognize that a covered company that does not have an identified critical operation and has been granted a waiver may not experience any changes between resolution plan submissions that would increase the likelihood of it having a critical operation. Accordingly, to balance the benefits of covered companies engaging in a process to identify their critical operations with the burden placed on covered companies, the final rule provides that if a critical operations waiver request is granted, the waiver will remain effective until the covered company is required to submit its next full resolution plan. For example, if a triennial full filer submits a waiver request in connection with a full resolution plan that is due on or before July 1, 2024 and the request is approved, the waiver would be effective for the July 1, 2024 full resolution plan submission and the firm's next regularly scheduled targeted resolution plan due on or before July 1, 2027. To continue the effectiveness of the waiver, the covered company would need to submit a new waiver request at least 18 months before its next regularly scheduled full resolution plan due on or before July 1, 2030. Similarly, if a triennial full filer submits a waiver request in connection with a targeted resolution plan and the request is granted, the waiver would be effective for only that targeted resolution plan and not its next full resolution plan.

The agencies recognize a foreign firm may not first determine the category of standards to which it is subject (and, accordingly, whether it is a triennial full filer or a triennial reduced filer) until after the date by which a triennial full filer would need to submit a waiver request with respect to its resolution plan due on or before July 1, 2021. Therefore, the final rule exempts each foreign triennial full filer from the requirement to establish and implement a process and methodology designed to identify their critical operations with respect to its resolution plan due on or before July 1, 2021 if the foreign firm does not have an identified critical operation as of the date by which the waiver would have had to be submitted for this resolution plan submission (i.e., 17 months before the resolution plan submission date).

In addition, the agencies are clarifying the final rule by eliminating usage of the term “economic function,” as suggested by the commenter. However, consistent with the preamble to the proposed rule, the agencies note that the types of operations that may be critical operations include, but are not limited to, the core banking functions of deposit taking; lending; payments, clearing and settlement; custody; wholesale funding; and capital markets and investment activities. In general, an operation is most likely to be a critical operation of the firm where both (a) a market or activity engaged in by the firm is significant to U.S. financial stability and (b) the firm is a significant provider or participant in such a market or activity. Factors relevant for determining whether a market or activity is significant to U.S. financial stability, or whether a firm is a significant provider or participant in such a market or activity, may include substitutability, market concentration, interconnectedness, and the impact of cessation. The firm's analysis should focus on the significance of the activity to U.S. financial stability, not whether a particular activity is significant for a foreign parent or other foreign affiliates of the firm.^[38] The process undertaken by a firm in completing such an analysis should be commensurate with the nature, size, complexity, and scope of its operations.^[39]

2. Identification by Agencies and Requests for Reconsideration

Under the proposal, the agencies would have reviewed the operations of covered companies at least every six years to determine whether any new operations should be identified as critical or any prior identifications should be rescinded. The proposal provided that, when the agencies identified an operation as critical, the covered company would have been required to treat the operation as an identified critical operation in future resolution plans, unless the identification occurred within six months of a firm's resolution plan submission date. In addition, the proposal would have permitted a covered company to request that the agencies reconsider a jointly made critical operation identification. The agencies generally would have been required to complete their assessment of the request within 90 days after receipt of the request, if the request were made at least 270 days before the firm's next resolution plan submission deadline.

Commenters were generally supportive of efforts to codify the critical operations identification processes. Some commenters suggested that the agencies modify the timeline for de-identification of a critical operation identified by the agencies.^[40] A commenter also suggested that the deadline for the agencies to be able to identify a new critical operation be 12 months prior to a submission deadline, instead of six months, as proposed.

The agencies are adopting the proposed provisions related to the identification of critical operations by the agencies with revisions that address certain concerns raised by commenters.^[41] Consistent with the proposal, the final rule permits the joint identification and rescission of critical operations by the agencies at any time and the agencies will review all identified critical operations and the operations of firms for consideration as critical operations at least every six years. The agencies recognize that a firm may require time to revise its resolution plan to take into account a newly identified critical operation. Therefore, consistent with commenters' feedback, a covered company will be required to treat a critical operation as an identified critical operation only if the joint identification is made at least 12 months before the resolution plan submission date. The agencies believe 12 months is a reasonable period for a firm to assess the identified critical operation and adjust its resolution plan. To align with this notice period, the agencies will endeavor to complete their first joint review under the final rule of the operations of covered companies at least 12 months prior to the 2021 resolution plan submission date.

Finally, the agencies are adopting a modified process whereby firms can request that the agencies reconsider a jointly identified critical operation. Under the final rule, a firm may request reconsideration of a jointly identified critical operation at any time. If a firm requests reconsideration at least 18 months prior to its next resolution plan submission date, the agencies will generally complete their review no later than 12 months before that resolution plan submission date. However, the agencies may request additional information, in which case the agencies will complete their review no later than the later of (a) 90 days after the submission of all requested information and (b) 12 months before the resolution plan submission date. This generally aligns the timing for requests for reconsideration with the timing under the final rule for waiver requests of the requirement to establish and implement a process designed to identify critical operations and firm-initiated waiver requests of informational content requirements.

The agencies retain discretion to defer consideration of a reconsideration request submitted less than 18 months before a resolution plan submission date until after the covered company's next submission. If the agencies do not defer consideration of the reconsideration request, the agencies intend to communicate with the firm regarding the timing of the agencies' response. If the agencies defer consideration of a request submitted less than 18 months before a resolution plan submission date, the agencies will generally complete their review no later than 12 months before the next resolution plan submission date that follows that resolution plan submission date.

The agencies understand commenters' concerns regarding the de-identification timeline, and have revised and lengthened the process to provide covered companies with additional notice of new identifications prior to a resolution plan submission date. However, the agencies decline to adopt the commenters' request for an automatic rescission of a critical operations identification if a request is submitted at least 15 months before the firm's next resolution plan is due and the agencies have not acted within three months. A firm's initial request for de-identification may be incomplete or unclear, and critical operations identifications may raise complex issues that require substantial time to consider. Accordingly, the agencies may require more than 90 days to make an informed decision regarding whether an operation should be de-identified. The agencies believe the final rule adequately balances covered companies' need for certainty prior to a resolution plan submission date with the need to carefully assess critical operations identifications.

D. Clarifications to the 2011 Rule

1. Resolution Strategy for Foreign-based Covered Companies

The 2011 rule does not specify the assumptions a foreign banking organization should make with respect to how resolution actions it takes outside of the United States should be addressed in its resolution plan. The proposal, consistent with general guidance that the agencies have previously provided,^[42] would have clarified that covered companies that are foreign banking organizations should not assume that the covered company takes resolution actions outside of the United States that would eliminate the need for any U.S. subsidiaries to enter into resolution proceedings.

One commenter asserted that the agencies should better align U.S. resolution planning with home country resolution strategy by recognizing the development of single point of entry strategies, total loss absorbing capacity, and other improved resolvability measures implemented by international banks. Although the agencies recognize that foreign banking organizations may have home-country resolution strategies under which U.S. entities are not planned to enter resolution, the Dodd-Frank Act requires firms to plan for the failure of their U.S. operations. General guidance and firm-specific feedback have taken into account resolution plan resolvability improvements made by foreign banking organizations. Accordingly, the final rule includes this clarification as proposed.

2. Covered Company in Multi-Tier Foreign Banking Organization Holding Companies

The definition of covered company in the 2011 rule includes the top tier entity in a multi-tier holding company structure of any foreign bank or company that is a bank holding company or is treated as a bank holding company under section 8(a) of the International Banking Act of 1978. There is no benefit to the agencies in obtaining resolution plan information relating to a top tier holding company that is, for example, a government, sovereign entity, or family trust. The agencies previously addressed this issue on a case-by-case basis and proposed including a formal process in the proposal by which the agencies would identify a subsidiary in a multi-tiered FBO holding company structure to serve as the covered company that would be required to submit the resolution plan. The agencies did not receive comment on this provision and are adopting the clarification as proposed.

3. Removal of the Incompleteness Concept and Related Review

The 2011 rule includes a requirement that the agencies review a resolution plan within 60 days of submission and jointly inform the covered company if the resolution plan is informationally incomplete or additional information is required to facilitate review of the resolution plan. This process has not led to resubmissions in recent years, and the proposal would have removed it. The agencies received one comment in support of this provision, and the agencies are removing the incompleteness concept and related review as proposed for the reasons stated in the proposal.

4. Assessment of New Covered Companies

The 2011 rule provides that covered company status for a foreign banking organization may be based on annual or quarterly reports, depending on availability of such reports, but does not clarify whether firms that file quarterly reports would be assessed for covered company status on a quarterly or annual basis. The proposal would have clarified that a foreign banking organization's status as a covered company would be assessed quarterly for foreign banking organizations that file the Federal Reserve's Form FR Y-7Q (FR Y-7Q) on a quarterly basis and annually for foreign banking organizations that file the Y-7Q on an annual basis only. In each case, the assessment would have been based on total consolidated assets as averaged over the preceding four calendar quarters as reported on the FR Y-7Q.

In addition, the proposal would also have addressed the process for assessing a firm whose assets have grown due to a merger, acquisition, combination, or similar transaction for covered company status. Under these circumstances, the agencies would have the discretion to alternatively consider, to the extent and in the manner the agencies jointly consider appropriate, the relevant assets reflected on the one or more of the four most recent reports of the pre-combination entities (the FR Y-9C in the case of a U.S. firm and the FR Y-7Q in the case of a foreign banking organization). The agencies did not receive comment on these provisions and are adopting the clarifications as proposed.

5. Timing of New Filings, Firms That Change Filing Categories

To address the new filing cycles for biennial, triennial full, and triennial reduced filers, the proposal included related modifications to the timing of the initial submission for new filers. The proposal also included a reservation of authority permitting the agencies to require the initial resolution plan earlier than the date of the filing group's next filing, so long as the submission deadline would have been at least 12 months from the date on which the agencies jointly determined to require the covered company to submit its resolution plan. Similarly, the proposal specified the timing and type of resolution plan a firm would be required to submit if it changed groups (e.g., a triennial reduced filer becomes a triennial full filer or a triennial full filer becomes a triennial reduced filer). The agencies received no comments on these changes and are finalizing them as proposed with technical changes to clarify that the relevant date for these timing provisions is the date as of which the covered company became a covered company or a member of a filing group.

6. Clarification of the Mapping Expectations for Foreign Banking Organizations

The proposal would have amended the language governing the expectations regarding the mapping of intragroup interconnections and interdependencies by foreign banking organizations. The proposal also would have clarified that foreign banking organizations would be expected to map (a) the interconnections and interdependencies among their U.S. subsidiaries, branches, and agencies, (b) the interconnections and interdependencies between these U.S. entities and any critical operations and core business lines, and (c) the interconnections and interdependencies between these U.S. entities and any foreign-based affiliates. The agencies did not receive comment on these provisions and are adopting the clarifications regarding mapping expectations for foreign banking organizations as proposed.

7. Standard of Review

In reviewing resolution plans, the agencies have identified “deficiencies” and “shortcomings” in resolution plans and have issued firm-specific feedback letters to covered companies describing the rationale for the findings and suggesting potential alternatives for how the identified deficiencies and shortcomings could be addressed. While the agencies have defined these terms in a public statement,^[43] they are not defined in the 2011 rule. To provide an opportunity for public comment on these terms and a clearer articulation of the standards the agencies apply in identifying deficiencies and shortcomings, the agencies proposed defining a deficiency and a shortcoming. In addition, the agencies proposed continuing to require a covered company that was assessed to have a deficiency to submit a revised resolution plan to the agencies addressing the deficiency within 90 days of receiving notice of the deficiency, consistent with the 2011 rule. The agencies received one comment in support of the proposal's timeline for requiring a firm to respond to a notice of deficiency, and the agencies are adopting the definitions of deficiency and shortcoming, and the related standard of review, as proposed.

8. Deletion of “Deficiencies” Relating to Management Information Systems

The 2011 rule requires a resolution plan to include information about a covered company's management information systems, including a description and analysis of the system's “deficiencies, gaps or weaknesses” in the system's capabilities. The proposal would have deleted the term “deficiencies” from this informational content requirement solely to avoid confusion with the proposal's new definition of “deficiencies” in the proposal, and not to change the informational content requirement relating to a covered company's management information systems. The agencies did not receive comment on this provision and are adopting the clarification as proposed.

9. Incorporation by Reference

Similar to the 2011 rule, the proposal would have continued to allow a covered company to incorporate by reference information from its previously submitted resolution plans, subject to certain restrictions. The proposal would have required the referenced information to remain accurate in all respects that are material to the covered company's resolution plan, and the incorporated information would remain subject to the contemporaneous certification requirement. The agencies intended that this clarification regarding the material accuracy of referenced information provide covered companies greater flexibility in their ability to incorporate by reference information, thereby reducing duplication and further streamlining the resolution planning process. One commenter supported this clarification and the proposed expanded ability of firms to utilize incorporation by reference, and the agencies are adopting the clarification as proposed.

E. Technical and Conforming Changes From the Proposal

In addition to the changes to the proposal described above, the final rule includes technical and conforming changes for purposes of clarity and consistency. For example, the final rule clarifies that firms are required to submit a resolution plan on or before the applicable submission date. The technical and conforming changes have no substantive effect on the final rule as compared to the proposal.

F. Board Delegation of Authority

The Board has delegated to its Director of Supervision and Regulation, or his or her delegatee, in consultation with the General Counsel, or his or her delegatee, the authority to identify on behalf of the Board a holding company in a multi-tiered holding company to satisfy the requirements that apply to a covered company under the final rule, to the extent such identification is consistent with the criteria specified in the final rule and does not raise any significant legal, policy, or supervisory concerns.

IV. Effective Date and Transition Period

The effective date of the final rule is [60 days after publication in the Federal Register]. Financial institutions that are covered companies under the final rule are required to comply with the final rule beginning on the effective date.

The requirements for covered companies' initial resolution plans under the final rule will be determined based on their categorization under the tailoring rules on October 1, 2020, which is after the first date foreign banking organizations are required to submit reports including data for purposes of their categorization based on their combined U.S. operations under the tailoring rules.^[44] In particular, firms that are covered companies as of the effective date of the final rule are required to submit their initial and subsequent resolution plans under the final rule as follows:

Biennial filers (all firms subject to Category I standards): Covered companies that are biennial filers on October 1, 2020 are required to submit their next resolution plans on or before July 1, 2021, unless a firm changes its filing group before July 1, 2021. This submission will be a targeted resolution plan. Thereafter, the biennial filers will alternate between filing full and targeted resolution plans on a biennial basis.

Triennial full filers (all firms subject to Category II or Category III standards): Covered companies that are triennial full filers on October 1, 2020 are required to submit targeted resolution plans on or before July 1, 2021, unless a firm changes its filing group before July 1, 2021. The proposal would have required these firms to submit a full resolution plan on or before July 1, 2021. The agencies recognize a foreign firm may not first determine the category of standards to which it is subject (and, accordingly, whether it is a triennial full filer or a triennial reduced filer) until after the date by which a triennial full filer would need to submit a firm-initiated waiver request of informational content requirements for a full resolution plan due on or before July 1, 2021. To provide clarity to covered companies during this transition period, the final rule requires all triennial full filers to submit a targeted resolution plan on or before July 1, 2021. Thereafter, the triennial full filers will alternate between filing full and targeted resolution plans on a triennial basis.

For firms with outstanding shortcomings or deficiencies, the agencies' expectations regarding remediation and related timelines established by the agencies continue to apply. For example, the four foreign banking organizations that received firm-specific feedback letters on December 20, 2018 (Barclays plc, Credit Suisse Group AG, Deutsche Bank AG, and UBS Group AG) are expected to address their shortcomings and complete their respective project plans by July 1, 2020, as provided in the agencies' firm-specific feedback letters. Consistent with prior communications to these firms, they are required to submit resolution plans on or before July 1, 2020 that may be limited to describing changes that the firms have made to their July 2018 resolution plans to address shortcomings identified in those resolution plans.^[45]

Likewise, consistent with previous communications to Northern Trust Corporation, it is required to provide an interim update, as specified in the agencies' joint March 29, 2019 firm-specific feedback letter, concerning its projects to address the liquidity shortcoming identified in its 2015 resolution plan.

Triennial reduced filers (all other filers): Covered companies that are triennial reduced filers on October 1, 2020 must submit their initial reduced resolution plans under the final rule on or before July 1, 2022, unless a firm changes its filing group before July 1, 2022. Thereafter, they are required to submit reduced resolution plans on a triennial basis.

V. Impact Analysis

The final rule will modify the expected costs imposed by the 2011 rule while seeking to preserve the benefits to U.S. financial stability provided by the 2011 rule. The economic effects of the final rule are driven by the changes in the reporting costs related to resolution plan submissions.

Consistent with EGRRCPA, the final rule changes the asset thresholds at which all firms are required to file resolution plans from $50 billion to $250 billion in total consolidated assets. The final rule also requires the submission of resolution plans by certain firms with $100 billion or more and less than $250 billion in total consolidated assets, including those that have certain risk-based indicators. As of March 31, 2019, firms with $50 billion or more and less than $100 billion in total consolidated assets accounted for less than 2 percent of total U.S. industry assets, and firms with $100 billion or more and less than $250 billion in total consolidated assets accounted for 18 percent of total U.S. industry assets.^[46] The net impact of these threshold changes would reduce the number of U.S. filers from 23 to 12 and the number of foreign banking organization filers from 86 to 62.^[47] This reduction in resolution plan filers decreases costs as fewer firms would be required to prepare plans.

The final rule also seeks to minimize the impact of this change on benefits to U.S. financial stability provided from resolution plan filings by maintaining filing requirements for certain firms with $100 billion or more and less than $250 billion in total consolidated assets, including those that have certain risk-based indictors.

The final rule also reduces the frequency of required resolution plan submissions for the remaining resolution plan filers, including the largest and most complex resolution plan filers, by extending the default filing cycle between resolution plan submissions. The final rule modifies the filing cycle to every two years for the U.S. GSIBs and certain systemically important nonbank financial companies and to every three years for all other resolution plan filers. This change formalizes a practice that has developed over time to extend firms' resolution plan submission dates to allow at least two years between resolution plan submissions and should reduce costs.

In the August 2018 proposal to extend mandatory Reporting Requirements Associated with Regulation QQ, the estimate of total annual burden for resolution plan filings was estimated to be 1,137,797 hours for 111 resolution plan filers.^[48] Since then, the number of resolution plan filers has declined to 109, with a current total annual burden of 1,066,086 hours.^[49] Under the final rule, the revised estimated annual burden, incorporating proposed modifications to the resolution plan rule, is 425,525 hours.^[50] At an estimated mean wage of $56.05 per hour,^[51] this reduction in the estimated burden hours has an estimated wage savings of approximately $35,903,444 per year. Reductions in submission frequency and content could potentially reduce the preparedness of covered companies to execute a rapid and orderly resolution in the event of material financial distress or failure. However, this potential economic effect would be ameliorated by the agencies' authority to require a firm to submit a full resolution plan, interim update, or alter resolution plan submission dates. This authority would address circumstances where the agencies determine that waiting for a firm to submit on its regular submission cycle could present excess risk.

Finally, the final rule is expected to improve efficiency by streamlining the information requirements for the resolution plan submissions: The final rule includes a mechanism for certain firms to request a waiver from certain informational requirements in full resolution plan submissions; introduces a new, more focused resolution plan submission (i.e., targeted resolution plan); and formalizes the conditions and content for reduced resolution plans. These resolution plan modifications are appropriate because the firms' resolution plans have matured and become more stable through multiple submissions. Further, the resolution plan modifications should reduce the costs of preparing and reviewing the resolution plans without having a material impact on the benefits provided by the resolution plans.

In short, as detailed in this section, the proposal would provide estimated wage savings, to the institutions affected by it, totaling $35,903,444 due to the reduction of an estimated 640,561 burden hours needed to comply with the final rule. Moreover, firms could reallocate the estimated 640,561 hours used to comply with the final rule to other activities considered to be more beneficial.^[52] Thus, the total economic benefits of the proposal could be greater than the dollar amount estimated.

VI. Regulatory Analysis

A. Paperwork Reduction Act

Certain provisions of the final rule contain “collections of information” within the meaning of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3521) (PRA). In accordance with the requirements of the PRA, the agencies may not conduct or sponsor, and a respondent is not required to respond to, an information collection unless it displays a currently valid Office of Management and Budget (OMB) control number. The agencies reviewed the final rule and determined that it would revise the reporting requirements that have been previously approved by the Board under OMB control number 7100-0346 (Reporting Requirements Associated with Regulation QQ; FR QQ). The Board's information collection will be extended for three years, with revision.

Since the original rule was adopted in 2011, the Board's PRA clearance has accounted for the entire burden associated with the rule even though the Board and the Corporation are both legally authorized to receive and review the Resolution Plans. The agencies have decided to now equally account for the burden associated with this final rule. As a result, the Corporation has submitted to OMB a request to implement, for three years, an information collection in connection with the final rule Resolution Plan submissions that accounts for half of the estimated burden associated with the final rule.

The Corporation has submitted its request to OMB for review and approval under section 3507(d) of the PRA (44 U.S.C. 3507(d)) and section 1320.11 of OMB's implementing regulations (5 CFR 1320). The Corporation submitted the information collection requirements to OMB at the proposed rule stage. OMB filed a comment assigning the Corporation OMB control number 3064-0210 and requested that the Corporation make a submission to OMB after the proposed rule is finalized. The Board has reviewed the final rule under the authority delegated to the Board by OMB. The agencies did not receive any comments on the PRA.

Proposed Information Collection

Title of Information Collection: Reporting Requirements Associated with Resolution Planning.

Agency Form Number: FR QQ.

OMB Control Number: 7100-0346.

Frequency of Response: Biennially, Triennially.

Respondents: Bank holding companies ^[53] with assets of $250 billion or more, bank holding companies with $100 billion or more with certain characteristics specified in the preamble, and nonbank financial firms designated by the Council for supervision by the Board.

The agencies did not receive any comments on their proposed revisions to this information collection. Accordingly, with the exception of minor technical adjustments, the information collection revisions are adopted as proposed in the proposal and replicated in the chart above.

B. Regulatory Flexibility Act

The Regulatory Flexibility Act (RFA) generally requires that, in connection with a final rulemaking, an agency prepare and make available for public comment a final regulatory flexibility analysis describing the impact of the proposed rule on small entities.^[58] However, a regulatory flexibility analysis is not required if the agency certifies that the final rule will not have a significant economic impact on a substantial number of small entities. The Small Business Administration (SBA) has defined “small entities” to include banking organizations with total assets of less than or equal to $600 million that are independently owned and operated or owned by a holding company with less than or equal to $600 million in total assets.^[59] For the reasons described below and under section 605(b) of the RFA, the agencies certify that the final rule will not have a significant economic impact on a substantial number of small entities. As of March 31, 2019, there were 4,004 insured depository institutions and approximately 3,198 bank holding companies that would fit the SBA's current definition of “small entity” for purposes of the RFA.

As discussed in detail above, section 165(d) of the Dodd-Frank Act requires certain financial companies to report periodically to the agencies their plans for rapid and orderly resolution under the Bankruptcy Code in the event of material financial distress or failure. This provision of the Dodd-Frank Act was amended by EGRRCPA in 2018. Specifically, EGRRCPA raised the $50 billion minimum asset threshold for general application of the resolution planning requirement to $250 billion in total consolidated assets, and provided the Board with discretion to apply the resolution planning requirement to firms with $100 billion or more and less than $250 billion in total consolidated assets. EGRRCPA also provides that any bank holding company, regardless of asset size, that has been identified as a U.S. GSIB under the Board's U.S. GSIB surcharge rule shall be considered a bank holding company with $250 billion or more in total consolidated assets for purposes of the application of the resolution planning requirement.

In accordance with section 165(d) of the Dodd-Frank Act as amended by EGRRCPA, the Board is amending Regulation QQ ^[60] and the Corporation is amending part 381 ^[61] to amend the requirement that a covered company periodically submit a resolution plan to the Board and Corporation.^[62] The final rule also modifies the procedures for joint review of a resolution plan by the agencies. The reasons and justification for the final rule are described in the preamble.

As discussed in the preamble, the final rule applies to covered companies, which include only bank holding companies and foreign banking organizations with at least $100 billion in total consolidated assets, and nonbank financial companies that the Council has determined under section 113 of the Dodd-Frank Act must be supervised by the Board and for which such determination is in effect. The assets of a covered company substantially exceed the $600 million asset threshold under which a banking organization is considered a “small entity” under SBA regulations.^[63]

The final rule also applies to a nonbank financial company designated by the Council for supervision by the Board under section 113 of the Dodd-Frank Act, regardless of such a company's asset size. As of the date of the adoption of the final rule, there are no such nonbank financial companies supervised by the Board. Although the asset size of nonbank financial companies may not be the sole determinative factor of whether such companies may pose systemic risks and would be designated by the Council for supervision by the Board, it is one consideration.^[64] It therefore may be unlikely that a financial firm that is at or below the $600 million asset threshold would be designated by the Council under section 113 of the Dodd-Frank Act.

Because the final rule is not likely to apply to any company with assets of $600 million or less, it is not expected to apply to any small entity for purposes of the RFA. The agencies do not believe that the final rule duplicates, overlaps, or conflicts with any other Federal rules.

In light of the foregoing, the Board and the Corporation certify that the final rule will not have a significant economic impact on a substantial number of small entities supervised.

C. Riegle Community Development and Regulatory Improvement Act of 1994

Pursuant to section 302(a) of the Riegle Community Development and Regulatory Improvement Act (RCDRIA),^[65] in determining the effective date and administrative compliance requirements for new regulations that impose additional reporting, disclosure, or other requirements on insured depository institutions (IDIs), each Federal banking agency must consider, consistent with principles of safety and soundness and the public interest, any administrative burdens that such regulations would place on depository institutions, including small depository institutions, and customers of depository institutions, as well as the benefits of such regulations. In addition, section 302(b) of RCDRIA requires new regulations and amendments to regulations that impose additional reporting, disclosures, or other new requirements on IDIs generally to take effect on the first day of a calendar quarter that begins on or after the date on which the regulations are published in final form.^[66]

Because the final rule would not impose additional reporting, disclosure, or other requirements on IDIs, section 302 of the RCDRIA therefore does not apply.

D. Plain Language

Section 722 of the Gramm-Leach-Bliley Act ^[67] requires the Federal banking agencies to use plain language in all proposed and final rules published after January 1, 2000. The agencies have sought to present the final rule in a simple and straightforward manner, and did not receive any comments on plain language.

E. The Congressional Review Act

For purposes of Congressional Review Act, the OMB makes a determination as to whether a final rule constitutes a “major” rule.^[68] If a rule is deemed a “major rule” by the Office of Management and Budget (OMB), the Congressional Review Act generally provides that the rule may not take effect until at least 60 days following its publication.^[69]

The Congressional Review Act defines a “major rule” as any rule that the Administrator of the Office of Information and Regulatory Affairs of the OMB finds has resulted in or is likely to result in (A) an annual effect on the economy of $100,000,000 or more; (B) a major increase in costs or prices for consumers, individual industries, Federal, State, or local government agencies or geographic regions, or (C) significant adverse effects on competition, employment, investment, productivity, innovation, or on the ability of United States-based enterprises to compete with foreign-based enterprises in domestic and export markets.^[70]

The OMB has determined that the final rule is not a “major rule” within the meaning of the Congressional Review Act. As required by the Congressional Review Act, the agencies will submit the final rule and other appropriate reports to Congress and the Government Accountability Office for review.

Text of the Common Rules

(All Agencies)

The text of the common rules appears below:

PART [ ]—RESOLUTION PLANS

[END OF COMMON TEXT]

List of Subjects

12 CFR Part 243

• Administrative practice and procedure
• Banks
• Banking
• Holding companies
• Reporting and recordkeeping requirements
• Securities

12 CFR Part 381

• Administrative practice and procedure
• Banks
• Banking
• Holding companies
• Reporting and recordkeeping requirements
• Resolution plans

Adoption of the Common Rule Text

The adoption of the common rules by the agencies, as modified by agency-specific text, is set forth below:

BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM

12 CFR Chapter II

Authority and Issuance

For the reasons set forth in the preamble, the Board of Governors of the Federal Reserve System revises part 243 to 12 CFR chapter II as set forth in the text of the common rule at the end of the preamble and further amends 12 CFR part 243 as follows:

PART 243—RESOLUTION PLANS (REGULATION QQ)

1. The authority citation for part 243 continues to read as follows:

Authority: 12 U.S.C. 5365.

2. The heading of part 243 is revised to read as set forth above.

3. In § 243.1, amend paragraph (a) by adding a sentence at the end to read as follows:

4. Add § 243.13 to read as follows:

FEDERAL DEPOSIT INSURANCE CORPORATION

12 CFR Chapter III

Authority and Issuance

For the reasons set forth in the preamble, the Federal Deposit Insurance Corporation revises part 381 to 12 CFR chapter III as set forth in the text of the common rule at the end of the preamble and further amends 12 part 381 as follows:

PART 381—RESOLUTION PLANS

5. The authority citation for part 381 continues to read as follows:

Authority: 12 U.S.C.5365(d).

6. In § 381.2, in paragraph (1)(v) of the definition of “covered company”, add the words “of this title” after the phrase “pursuant to § 243.13”.

Footnotes