The Federal Deposit Insurance Corp. has notable gaps in its preparedness to resolve large regional bank failures, according to a Wednesday report issued by the agency's Office of Inspector General.
These deficiencies, the OIG said, hampered effective crisis management during the collapses of Silicon Valley Bank, Signature Bank and First Republic Bank last year.
"At the time of the spring 2023 failures, the FDIC had not ensured that it fully met human and technology resource needs or that it sufficiently coordinated resources among its divisions and offices," the report stated. "The FDIC's readiness to resolve large regional banks under the Federal Deposit Insurance Act was not sufficiently mature to facilitate consistently efficient response efforts in a potential crisis failure environment."
The OIG's evaluation — covering activities from January 2022 to June 2024 — focused on the FDIC's readiness to manage the failures of these large banks, in part by examining the agency's own crisis response
While the FDIC ultimately resolved these banks through purchase and assumption agreements, the process exposed weaknesses in resource coordination, staff training and overall operational efficiency, the report said. The OIG noted that these shortcomings placed additional strain on collaboration between FDIC divisions and highlighted the need for improvements to prevent future crises.
The FDIC lacked a mature framework for deploying human and technological resources and had not effectively incorporated best practices into its resolution planning. Specific gaps included incomplete regional resolution frameworks, limited interdivisional training and inadequate readiness monitoring. These issues raised concerns about the agency's ability to manage future large regional bank failures.
The OIG issued 11 recommendations to the bank regulator. The OIG suggested the FDIC prop up an agencywide resource committee dedicated to ensuring staffing, recruitment and IT resources for resolution are sufficient. The OIG also recommended that the FDIC update its regional resolution framework document and formalize policies for teamwork between departments to streamline collaboration. The recommendations also called for updating institution-specific resolution plans and conducting regular interdivisional reviews of these plans to improve coordination.
The inspector general urged the FDIC to implement comprehensive training programs on resolution procedures for staff, with an emphasis on role-specific and functional expertise and organizing periodic interdivisional drills to test and refine agency crisis response. They also directed the FDIC to coordinate memos to clarify shared responsibilities across divisions and track recommendations from post-crisis assessments to ensure actionable follow-ups. The OIG also urged the agency to introduce regular, risk-based internal audits of planning activities and development status updates on operational readiness.
The FDIC agreed with the recommendations and committed to implementing corrective actions by June 30, 2026.
Key Republican lawmakers, including North Carolina Rep. Patrick McHenry and South Carolina Sen. Tim Scott,
FDIC officials, for their part, defended the agency's actions and argued they made a difficult decision to invoke a
The FDIC has updated its resolution planning regulations for winding down large insured depository institutions multiple times in recent years. Recent amendments
Banks with at least $100 billion in total assets are required to submit full resolution plans which include comprehensive end-to-end strategies for resolving the bank under various scenarios and detailed valuation analyses of the entire franchise and its components. The FDIC also requires these largest firms to demonstrate their ability to quickly establish virtual due diligence data rooms — that contain the necessary information that would allow interested parties to submit bids for the entire institution or its constituent parts.
