Washington D.C. — The Federal Deposit Insurance Corporation (FDIC) and the Federal Reserve Board today announced the publication of feedback letters for resolution plans submitted in October 2025 by 15 prominent banking organizations. Notably, the joint review by the agencies concluded without identifying any shortcomings or deficiencies in these submissions, marking a significant milestone in the ongoing efforts to bolster financial stability. This positive assessment indicates a maturing of the resolution planning process within the U.S. financial system, reflecting substantial investments by banks and rigorous oversight by regulators. In a related development, the agencies also confirmed that the shortcoming previously identified in the 2021 resolution plan of BNP Paribas has been satisfactorily addressed, underscoring the iterative and corrective nature of the regulatory framework.

The Mandate for Orderly Resolution: A Post-Crisis Imperative

The concept of "resolution plans," commonly known as "living wills," emerged directly from the ashes of the 2008 global financial crisis. The crisis exposed critical vulnerabilities in the financial system, particularly the dilemma of "Too Big To Fail" (TBTF) institutions. During that period, the failure of large, interconnected financial firms threatened to cascade throughout the global economy, necessitating extraordinary government interventions and taxpayer-funded bailouts to prevent a complete collapse. This stark reality highlighted the urgent need for a framework that would allow for the orderly resolution of a failing systemically important financial institution (SIFI) without jeopardizing financial stability or imposing costs on taxpayers.

In response, Congress enacted the Dodd-Frank Wall Street Reform and Consumer Protection Act in 2010. Section 165(d) of this landmark legislation mandated that certain large, complex financial institutions periodically submit to the FDIC and the Federal Reserve Board comprehensive plans for their rapid and orderly resolution in the event of material financial distress or failure. The core objective of these living wills is to ensure that, should a major bank face collapse, it can be wound down in a structured manner, protecting critical functions, minimizing contagion, and avoiding the need for public funds. The mandate has since become a cornerstone of post-crisis financial regulation, fundamentally altering how large banks prepare for potential insolvency.

Evolution of Resolution Planning: A Decade of Refinement

The journey of resolution planning has been one of continuous evolution and refinement since the first submissions over a decade ago. Initially, the requirements were broadly applied, and both banks and regulators grappled with the complexity of mapping out hypothetical failure scenarios for multi-trillion-dollar global institutions. Early plans often revealed significant challenges in data availability, legal entity rationalization, and the ability to quickly separate critical operations. These initial reviews frequently resulted in agencies identifying shortcomings or even deficiencies, requiring banks to resubmit revised plans and implement corrective actions.

A significant shift occurred with the passage of the Economic Growth, Regulatory Relief, and Consumer Protection Act (EGRRCPA) in 2018. This legislation introduced a tailoring framework for regulatory requirements, including resolution planning, based on a bank’s size, complexity, interconnectedness, and cross-jurisdictional activity. Consequently, the frequency of resolution plan submissions moved from an annual to a biennial cycle for many institutions, and the stringency of requirements was adjusted across different categories of banking organizations. For instance, global systemically important banks (GSIBs) — often referred to as Category I firms — continue to face the most comprehensive and stringent requirements, reflecting their unique potential to pose systemic risk. The 15 banking organizations referenced in the current announcement, each with over $250 billion in assets, likely fall into Category II, III, or IV, which still mandates robust resolution planning. This tailoring aims to make regulation more efficient and effective, reducing undue burden while maintaining robust oversight where systemic risk is greatest.

Anatomy of a ‘Living Will’

A comprehensive resolution plan is far more than a simple contingency document; it is an intricate blueprint detailing how a vast and complex financial enterprise can be dismantled and resolved without causing widespread panic or economic disruption. Key elements that banks must address in their submissions include:

• Capital and Liquidity: Detailed strategies for maintaining sufficient capital and liquidity throughout a resolution, including identification of potential sources and uses of funds, and mechanisms for internal recapitalization.
• Critical Operations and Core Business Lines: Identification of essential services and functions that must continue uninterrupted during a resolution to prevent harm to the financial system or the broader economy. This includes mapping interdependencies and developing strategies for their seamless transfer or wind-down.
• Legal Entity Structure: A clear articulation of the bank’s legal entity structure, including strategies for rationalizing and simplifying it to facilitate resolution. This involves understanding how different subsidiaries and affiliates interact and how they can be isolated or disposed of.
• Governance and Management Information Systems: Robust governance structures to manage the resolution process, coupled with reliable and accessible management information systems (MIS) capable of providing critical data (e.g., on assets, liabilities, exposures, and collateral) in a timely manner.
• Derivatives and Trading Operations: Specific plans for managing and unwinding complex derivatives portfolios and trading positions to minimize market disruption and avoid fire sales.
• Payment, Clearing, and Settlement Activities: Strategies to ensure the continuity of essential payment, clearing, and settlement services, which are vital for the functioning of the financial system.
• Cross-Border Cooperation: For global institutions, plans must address how resolution actions would be coordinated with foreign regulators, given the international nature of their operations.

The objective is to demonstrate that the banking organization has the operational capacity, financial resources, and legal framework to execute a rapid and orderly resolution within a specified timeframe, typically 30 to 90 days, without relying on extraordinary public financial support.

The 2025 Submissions: A Clean Bill of Health

The joint review of the October 2025 resolution plans for the 15 banking organizations, each boasting assets exceeding $250 billion, yielded a definitively positive outcome: no shortcomings or deficiencies were identified. This assessment is particularly noteworthy. In past cycles, such reviews often led to the identification of areas requiring improvement, sometimes escalating to formal enforcement actions if critical deficiencies were not addressed. A "shortcoming" typically indicates a weakness that, if not remedied, could pose a credible risk to the orderly resolution of the firm. A "deficiency" is a more severe flaw that would make the orderly resolution of the firm impossible or not credible.

The absence of either category of findings suggests a significant maturation of the resolution planning capabilities within these institutions and an alignment with evolving regulatory expectations. It implies that these banks have successfully demonstrated credible strategies for maintaining critical operations, ensuring sufficient liquidity, and navigating complex legal entity structures in a stressed environment. This positive feedback reflects years of sustained effort, substantial financial investment in systems and personnel, and continuous engagement with regulatory bodies to refine and strengthen their living wills.

BNP Paribas: A Testament to Remediation

Further reinforcing the effectiveness of the regulatory process, the agencies confirmed that the shortcoming identified in the 2021 resolution plan of BNP Paribas has been satisfactorily addressed. While the specific nature of the 2021 shortcoming was not detailed in the current announcement, such issues often relate to critical aspects like data quality, the clarity of inter-affiliate agreements, or the operational feasibility of executing certain resolution strategies.

The resolution of this issue by BNP Paribas illustrates the iterative and adaptive nature of the resolution planning framework. When a shortcoming is identified, the banking organization is typically required to submit a remediation plan outlining specific actions and timelines to correct the identified weaknesses. The agencies then monitor the implementation of these plans closely. The satisfactory address of BNP Paribas’s shortcoming indicates that the bank successfully implemented the necessary changes, and the agencies are confident in the robustness of its updated resolution strategy. This example serves as a practical demonstration that the framework is not merely a compliance exercise but a dynamic process designed to foster continuous improvement in banks’ resolvability.

Industry and Regulatory Perspectives on Progress

The joint announcement from the FDIC and the Federal Reserve Board is likely to be met with cautious optimism across the financial sector. While no explicit statements from officials or industry representatives were provided beyond the press release, logical inferences can be drawn.

From the regulatory perspective, this outcome likely underscores the agencies’ view that the U.S. financial system is becoming more resilient. Officials from both the FDIC and the Federal Reserve would likely emphasize that these positive assessments reflect the ongoing commitment to strengthen financial stability and reduce the moral hazard associated with "Too Big To Fail." They would probably highlight the collaborative yet rigorous nature of the review process, asserting that it has led to tangible improvements in banks’ preparedness for crisis scenarios. Such an outcome would be seen as validation of the Dodd-Frank reforms and the continuous supervisory efforts.

For the banking industry, particularly the 15 organizations in question, the clean bill of health represents a significant achievement. Industry leaders would likely point to the substantial resources — both human capital and technological investment — dedicated to developing and refining these complex plans. They would emphasize their commitment to meeting regulatory expectations and enhancing their own resilience, viewing this positive feedback as validation of their efforts. While resolution planning is undeniably a costly and resource-intensive endeavor, a positive assessment can boost investor confidence and signal the industry’s capacity to navigate potential future crises without systemic disruption.

Broader Implications for Financial Stability

The consistent strengthening of resolution plans has profound implications for broader financial stability. Firstly, it significantly reduces the likelihood and impact of future financial crises. By ensuring that large banks can fail in an orderly manner, the framework mitigates the risk of contagion spreading across the financial system and into the real economy. This, in turn, enhances overall market confidence, as investors and counterparties can operate with greater certainty that systemic risk is being actively managed.

Secondly, it reinforces the principle that no institution is "Too Big To Fail" in a way that necessitates taxpayer bailouts. The credibility of living wills is crucial for deterring excessive risk-taking and ensuring that the costs of failure are borne by shareholders and creditors, rather than the public. This shift in accountability is a fundamental goal of post-crisis reforms.

Thirdly, the process of developing resolution plans has forced banking organizations to gain a deeper understanding of their own complex structures, interdependencies, and operational vulnerabilities. This internal self-assessment, driven by regulatory requirements, has led to improvements in risk management, governance, and data infrastructure across the industry, making banks inherently more resilient even outside of a resolution scenario. The sheer scale and detail required have led to operational enhancements that benefit the banks even in normal operating conditions.

Looking Ahead: Sustaining Vigilance and Adaptability

While the current positive assessment for the 2025 resolution plans is a significant achievement, the task of maintaining financial stability is an ongoing one. The financial landscape is dynamic, constantly evolving with new technologies, financial products, and global interconnections. Future challenges could emerge from areas such as climate-related financial risks, cybersecurity threats, the proliferation of digital assets, or geopolitical instability.

Both regulators and banking organizations must remain vigilant and adaptable. This means continually updating resolution plans to reflect changes in business models, market conditions, and regulatory expectations. The FDIC and the Federal Reserve will undoubtedly continue to refine their review methodologies, ensuring that the framework remains robust and effective in addressing emerging risks. The iterative nature of resolution planning, as exemplified by the BNP Paribas case, suggests that it is a continuous journey of improvement rather than a static compliance exercise. The ultimate goal remains to foster a financial system that is not only robust enough to withstand shocks but also capable of resolving failing institutions without systemic disruption or reliance on public funds, thereby safeguarding the economic well-being of the nation.