The Federal Deposit Insurance Corp. 's newly
Previously, the agency required banks to submit granular plans that imagine hypothetical failure scenarios. The revised guidance zeroes in on what potential buyers most need to close a deal quickly, said Alex Barrage, who called it a move that aims to provide regulatory relief while incorporating practical lessons from recent high-profile failures. Barrage is a partner at Troutman Pepper and a former FDIC executive who worked on resolution planning with Hill during her time at the agency.
"Really what this reflects is … a truly modified approach that is trying to get at the most salient things that a would-be buyer of a failed bank would need," Barrage said. "It's just really saying, 'We don't need a failure scenario, that's a hypothetical that's not helpful, the bridge-bank strategy is not something we should really plan for, we should be able to sell the bank.'"
The bridge-bank strategy refers to transferring a failed bank's operations to a temporary institution under the FDIC. That institution serves the remaining customers while the agency winds down the bank. These arrangements are meant to minimize the interruption for customers but also mean that the FDIC takes responsibility for the bank's assets.
What is the U.S. bank resolution plan?
The new resolution planning requirements simplify submissions from large regional banks, allowing them to outline one or more feasible, business-specific strategies and eliminating rigid benchmarks in favor of flexibility. Under the new standards — issued Friday in the form of updated answers to "frequently asked questions," rather than a formal rulemaking — banks are compelled to submit more general asset valuation methods, simplified digital platform reporting and streamlined communication plans across all resolution scenarios.
Ian Katz of Capital Alpha Partners said the new approach draws from the lessons of the March 2023 banking failures, which were among the most significant since the 2008 financial crisis, both in scale and systemic impact.
"Hill obviously is concerned that the bridge-bank approach used at SVB and Signature didn't work," Katz said. "He has talked previously about how both bled deposits after reopening as bridge banks."
The FDIC first issued the Insured Depository Institution, or IDI, rule in 2012, requiring banks with at least $50 billion in assets to submit plans for how they'd be resolved in a failure — essentially a "living will" under the Federal Deposit Insurance Act. Later in 2018, Congress passed the Economic Growth, Regulatory Relief and Consumer Protection Act, which scaled back parts of the Dodd-Frank Act and directed regulators to tailor requirements — including resolution planning — commensurate with an institution's size.
Under FDIC Chair Martin Gruenberg, the agency
The 2024 resolution rule and the 2025 revision require large banks to demonstrate their ability to quickly establish virtual data rooms to facilitate the sale or disposition of assets in a crisis.
Shortly after the 2025 revisions to the resolution FAQs,
The new standards, according to Katz, prioritize completing resolutions as quickly as possible, ideally through the traditional over-the-weekend sale or, if that isn't feasible, by selling the deposit franchise as soon as possible. In speeches reflecting on SVB and Signature, Hill has
"[Hill's] approach is that the emphasis shouldn't be on banks planning for their hypothetical failure, but on making it easier for FDIC to find a fix once they have failed and to not waste time and deposits trying to bring dying banks back from the dead," Katz said.
The updated FAQs focus on key practical details, such as identifying key personnel and providing examples of who those individuals might be, as well as clarifying the most material assets and franchise components. Barrage elaborates that the new approach prioritizes preparing for quick sales rather than bridge-bank solutions.
"I think what he's saying is the FDIC needs to be engaging with would be purchasers of banks and asking them: 'If we were to have a bank fail, what would you need over that weekend? What would it take for you to put a bid together?'" Barrage said. "So I think culturally, there's a change to policy."
According to Katz, Hill likely opted for revising the approach through FAQs instead of formal rulemaking because he viewed the rulemaking process as too slow and uncertain, especially given the uncertainty about the length of his impermanent tenure. Hill was appointed to the acting role by President Donald Trump in January, but it remains to be seen who takes the full position.
"This is the quickest way to change direction on this issue," Katz said. "I would think that since it's been more than two years since the 2023 banking turmoil, [Hill] thinks the changes need to be made now, rather than go through a rulemaking process that could take a year."
Barrage suggests that the decision is a tactical move, demonstrating how more subtle regulatory action can often achieve similar effects without the extended notice-and-comment period normally required for formal rules.
"The fact that this is being done through a modified approach and not as an amended rule should not be lost on anyone," she said. "I think the takeaway there is you don't always need to amend a rule to reduce burden and to 'right-size the requirements.'"
The move away from the Biden era's emphasis on bridge banks and extensive data collection also represents a difference in regulatory philosophy across administrations, Barrage said.
"On one end of the spectrum, there's a view that we need lots of information because sometimes information is like a security blanket, the FDIC was asking for more than they might think they need, even if they never know if they will need it," Barrage said. "Another view is: yeah, it's important to have information — as much as we can — at our fingertips, but we know that maybe all that information isn't going to be relevant in the crisis, so let's focus on, like, the top five things that we are going to need now, having lived through SVB, Signature, First Republic, etc."
Partial bank sales
Some banking experts, however, like New York University Law Professor Michael Ohlrogge, present a counterpoint to the idea that selling an entire bank is always the desirable approach.
Ohlrogge said a third option, aside from over-the-weekend sales or the FDIC operating the bank for extended periods, is partial bank sales which, in his view, are less costly to the Deposit Insurance Fund that the FDIC draws from to save banks in peril.
In these partial sales, the FDIC often sells the most attractive assets quickly, such as healthy loans, while retaining others, like non-performing loans, to be sold later or to different buyers. This approach, which the FDIC used more frequently in the 90s and early 2000s, allows for better returns by targeting specific assets to the right purchasers, he said.
While the agency has favored whole-bank sales, Ohlrogge said his research suggests that partial bank sales produce better results for the FDIC and bidders. By allowing buyers to choose specific assets, the FDIC could secure higher prices for assets and reduce its out-of-pocket expense, he said.
"The data that I've examined shows that it tended to be that banks would offer higher prices in these auctions for failed bank assets, if they have the ability to choose the assets they actually wanted to buy, and often those are the performing loans," Ohlrogge said. "In having the flexibility to allow bidders in these auctions to choose which assets they're going to buy, [FDIC] was able to get substantially better returns on those assets and therefore substantially lower costs to the FDIC."
Ohlrogge said more than 90% of the resolutions after the 2008 financial crisis have been whole-bank sales. He questioned the rationale behind this shift away from partial sales.
"I have never found a credible reason why that would be the case, so what I argue is that for a variety of reasons, the FDIC has decided to favor these whole bank sales that don't support least-cost resolution," he said. "I think in some cases, that's because of an implicit desire to rescue uninsured depositors, because if you do these whole bank sales, it rescues the uninsured depositors."
He attributes this shift not to increased franchise value, as some have argued, but rather because whole-bank sales simplify the resolution process and provide more immediate reassurance to stakeholders.
Art Wilmarth, a professor at George Washington University, said merger and acquisition resolution deals involving large banks will exacerbate the
These deals could "create potential joint failure risks and are also likely to have adverse competitive effects by producing more concentrated banking markets in local communities and regional areas," Wilmarth said. "The FDIC should carefully consider all of those costs and risks before establishing an across-the-board preference in favor of M&A weekend resolution deals."
