Statement by Jonathan McKernan, Director, FDIC, Board of Directors, on the Final Guidance for Resolution Plan Submissions of Triennial Full Filers (2024)
As I’ve previously said, one lesson of the events of March 2023 is that, despite 15 years of reform efforts, we still have a system that privatizes gains while socializing losses.
Even if our decision to invoke the “systemic risk exception” was the lesser of two evils,1we should be honest that SVB and Signature were bailouts.2We should acknowledge that those bailouts have not only fostered moral hazard but also undermined public confidence in the basic fairness of our banking system.
To avoid future bailouts, we need to accept that bank failures are inevitable in a dynamic economy. We should then plan for those bank failures by focusing on strong capital requirements and an effective framework for resolving large failed banks as our best hope for eventually ending this practiced habit we’ve developed of privatizing gains while socializing losses.
And so I am happy to support today’s finalization of the Title I resolution planning guidance for triennial full filers. This guidance is an important step toward an effective resolution framework.
Of course this guidance is not sufficient in itself. No system is adequate if we ourselves do not have the courage and conviction to pull the trigger and resolve a large failed bank without a bailout. This guidance, once implemented, should help instill that courage and conviction.
1
As discussed in my statement on the proposed special assessment, my vote in favor of the “systemic risk exception” was intended to exempt the resolution of SVB and Signature from the least-cost-resolution requirement so as to facilitate sales of the failed banks that hopefully would mitigate a wide range of serious adverse effects on economic conditions and financial stability that could have arisen out of winding down SVB and Signature in the normal course through a series of asset sales and deposit payouts.
2
I understand of course that the shareholders of SVB and Signature were wiped out. I understand also that the banking industry absorbed the cost of making SVB and Signature’s uninsured depositors whole. Some argue there was no bailout. But private parties—namely the uninsured depositors—that were otherwise on the hook to absorb SVB and Signatures’ losses did not take those losses thanks to extraordinary action by the FDIC; instead, thanks to that extraordinary action, those losses were borne by others. That’s a bailout.
Jonathan McKernan was sworn in as a member of the Board of Directors on January 5, 2023. Mr. McKernan previously was a Counsel to Ranking Member Pat Toomey (R-PA) on the staff of the Senate Committee on Banking, Housing, and Urban Affairs.
The FDIC developed the guidance jointly with the Federal Reserve. These resolution plans, also known as living wills, describe a bank's strategy for rapid and orderly resolution under bankruptcy in the event of material financial distress or failure.
Establish Policies. The board of directors should ensure that all significant activities are covered by clearly communicated written policies that can be readily understood by all employees. ...
About the FDIC. The Federal Deposit Insurance Corporation (FDIC) is an independent agency created by the Congress to maintain stability and public confidence in the nation's financial system.
As a fiduciary, a bank's primary duty is the management and care of property for others. The Board of Directors and senior management must be able to identify, measure, monitor and control the risks inherent in fiduciary activities, and respond appropriately to changing business conditions.
Some of the duties which directors are expected to perform are attending meetings, remaining properly informed, making enquiries and obtaining input from third parties.
1. As detailed in the report, the independent review found that, for far too many employees and for far too long, the FDIC has failed to provide a workplace safe from sexual harassment, discrimination, and other interpersonal misconduct.
The Board of Directors of the FDIC manages operations to fulfill the agency's mission. Each member of the five-person Board is appointed by the President and confirmed by the Senate.
released the following statement after President Biden nominated Christy Goldsmith Romero to replace Martin Gruenberg as Chair of the Federal Deposit Insurance Corporation (FDIC).
Corey McKernan (born 19 December 1973) is a former Australian rules footballer who played for the North Melbourne Kangaroos and Carlton Blues in the Australian Football League (AFL).
Introduction: My name is Dr. Pierre Goyette, I am a enchanting, powerful, jolly, rich, graceful, colorful, zany person who loves writing and wants to share my knowledge and understanding with you.
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