WBK Industry News - Federal Regulatory Developments

Deficiencies Identified in National Bank’s Targeted Resolution Plan

In a recent joint feedback letter, the Federal Reserve and the Federal Deposit Insurance Corporation (FDIC) identified weaknesses in a national bank’s 2021 targeted resolution plan submission concerning its data management practices (2021 Targeted Plan). 

Under the Resolution Plan Rule of the Dodd-Frank Act, bank holding companies with $250 billion or more in total consolidated assets, certain bank holding companies with total consolidated assets of between $100 billion and $250 billion, and certain designated nonbank financial companies must provide a report to the agencies detailing their plan for a rapid and orderly resolution in the event of material financial distress or failure.  The national bank was required to submit such targeted plans every two years, alternating between full and targeted resolution plans.  Amongst other items, the 2021 Targeted Plan was to include the national bank’s actions in response to events surrounding the COVID-19 pandemic, a description of any material changes since its previously submitted targeted plan and the corresponding changes to its resolution plan, and any changes to its resolution plan as a result of any changes to governing laws, regulations, or guidance. 

Following a review of the 2021 Targeted Plan, the agencies identified shortcomings concerning data integrity and data management.  Specifically, they found issues with the national bank’s ability to produce timely and accurate data, a finding previously identified by the Federal Reserve in an October 2020 Consent Order, which could have an integral impact on the national bank’s ability to assess the occurrence or severity of financial distress, or evaluate and initiate bankruptcy proceedings in a timely manner. 

In its January 31, 2023, submission, the national bank will have to identify the actions expected to improve its production of timely and accurate data, and explain in detail how those actions will accomplish that objective.  Additionally, it will have to explain how it expects to demonstrate such improvements to its data governance program based on those actions.