Comptroller of the Currency Jonathan Gould described the resolution planning regime as having failed to deliver practical value and drifted beyond statutory authority since its implementation in the wake of the 2008 financial crisis, while addressing the American Bar Association Banking Law Committee on Jan. 16.
Noting that bank failures far predate the establishment of “living wills,” as defined under Sec. 165(d) of the Dodd-Frank Act, Gould advocated for a dialogue about prospect of substantially paring back the current framework with a focus on rebuilding regulators’ core resolution capabilities.
He also questioned the legal basis for certain resolution planning requirements placed on the nation’s largest and most complex covered insured depository institutions (CIDIs) regulated by the Federal Deposit Insurance Corp. (FDIC). Specifically, he said agency’s CIDI plan requirements seem, to some extent, to be an attempt to shift the FDIC’s statutory responsibilities to the banks they regulate.
“One of the FDIC’s core statutory missions is acting as receiver in the event of a bank’s failure,” Gould said. “I do not believe the FDIC should outsource the very reason for its existence to a third party, much less to a bank that is the object of its resolution authority. In its earlier iterations and still to an extent today, the CIDI Plan requirement seems an attempt to shift the FDIC’s own statutory responsibilities to banks.”
He argued that this approach has not demonstrably reduced losses to the Deposit Insurance Fund , pointing to the 2023 failures of Silicon Valley Bank and First Republic Bank, which were significant drains on the fund despite years of resolution planning by both banks.
“These bank failures raise important questions about the FDIC’s readiness to resolve regional and even midsize banks, notwithstanding decades of statutory reforms and major investments by the agency and by the banks into resolution planning,” Gould contended. “Following these failures, the FDIC Office of the Inspector General ‘determined that the agency’s readiness to resolve large regional banks under the FDI Act was not sufficiently mature to facilitate consistently efficient response efforts in a potential crisis failure environment.’ Similar concerns have been echoed by others in the banking industry.”
Gould cited data published by New York University School of Law Professor Michael Ohlrogge indicated that, since the start of the financial crisis, the U.S. has seen a dramatic increase in FDIC costs of resolving failed banks. Ohlrogge estimated these resolutions have “resulted in at least $45 billion in additional resolution expenses over the past 15 years,” with “$41 billion attributable to new inefficiencies in the resolution process.”
With these numbers in mind, Gould said he is concerned that resolution planning activities have contributed to the decline in the FDIC’s performance.
He urged the FDIC to continue moving away from CIDIs and instead invest in internal resolution execution capabilities, expressing optimism that such a shift was already underway under FDIC Chairman Travis Hill.
“On the upside and with new leadership, there are signs that the FDIC is taking a more critical and self-aware look at its role in bank resolutions than it has thus far,” Gould said.
He went on to stress the importance of working to preserve public confidence in institutions and agencies for the banking industry, but that doing is counterproductive if it “discourages tough conversations, impedes public transparency, or frustrates addressing underlying problems.”
While he acknowledged that 165(d) plans have a clear statutory basis and make more conceptual sense because they operate under the Bankruptcy Code, he said their implementation has been undermined by excessive reliance on informal guidance, shifting expectations and highly technical models functioning as de facto binding requirements.
He did not provide a fixed timetable but indicated that some FDIC “capabilities testing” was planned for early 2026 and signaled support for near-term reforms rather than incremental adjustments.