1. Fred S. Carns Federal Deposit Insurance Corporation
Role of Deposit Insurance in Bank Resolution Framework
Lessons from the Financial Crisis
November 13-16, 2011
JODHPUR, INDIA

2. Problem Institutions and Bank Failures

3. Bank Failures by Resolution Type
*As of 21 October 2011

4. Key Lessons Learned
To restore discipline in the marketplace, large, complex banks and other financial companies must be allowed to fail if they become nonviable
The absence of effective resolution tools led directly to government bailouts
Bailouts were necessary under the circumstances, but brought serious adverse consequences for the financial system
Cross-border cooperation is essential to the orderly liquidation of large, international financial institutions
Failure to manage excessive debt and leverage is dangerous
The single most important element of a strong and stable banking system is its capital base
Supervisors need to enforce hard and fast objective capital standards

5. Reform Measures End Too-Big-to-Fail Limit Financial Leverage
Subject SIFIs to heightened supervisory oversight by the Federal Reserve
Require SIFIs to develop and maintain resolution plans
Orderly Liquidation Authority given to the FDIC to execute a SIFI resolution
Limit Financial Leverage
Basel III
Collins Amendment
SIFI surcharge
Fortify the U.S. deposit insurance regime
Increase coverage
Change funding strategy
International Initiatives
FSB Key Attributes for Effective Resolution Regimes
Report and Recommendations of the Basel Committee CBRG

6. New Roles and Responsibilities of the FDIC under Dodd-Frank
Expanded receivership authorities
Orderly liquidation of SIFIs
Authority to remove SIFIs from bankruptcy process (shared)
Resolution plans
Living wills submitted to the FRB, FSOC and FDIC
Failure to submit plan may result in further restrictions
Strengthened back-up authority
Special examinations
Back-up enforcement actions
Deposit insurance fund
Minimum reserve ratio
Eliminates maximum limit
Permanent increase in deposit insurance coverage
Change in assessment base

7. The FDIC has taken several actions in line with its expanded powers
Final Rules
Orderly Liquidation Authority provisions
Minimum risk-based capital requirements
Reserve ratio
Resolution plans – joint final rule
Proposed Rules
Orderly Liquidation – maximum obligation limitations
Prohibitions on Proprietary Trading ("Volcker Rule")
Other Initiatives
Establishment of the FDIC Systemic Resolution Advisory Committee

8. 8

9. Ten Largest International Financial Institutions
Total assets, year-end 2010*
Country of headquarters
Number of countries with operations
BNP Paribas
$2,680.3
France
> 80
Deutsche Bank
2,556.2
Germany 74
HSBC Holdings
2,454.7 UK 87
Barclays
2,332.7
> 50
Royal Bank of Scotland Group
2,276.2 39
Bank of America Corporation
2,264.9
United States
> 41
Mitsubishi UFJ Financial Group
2,183.9
Japan
> 40
Crédit Agricole
2,137.5 70
JPMorgan Chase
2,117.6
> 60
Citigroup
1,913.9
160
* USD in millions
Source: U.S. Government Accountability Office

10. THANK YOU
Fred Carns | +1 (202) | 10