The Office of the Comptroller of the Currency (OCC) announced this week that the nation’s largest banks will need to develop a “recovery plan” to help it survive a crisis.
The OCC’s announcement signifies an effort by the agency to provide additional guidance beyond the FDIC and Federal Reserve’s “living wills,” establishing a planning process that encourages the nation’s largest banks to prepare and take action before they fail. The FDIC and the Federal Reserve Board are mandated by the Dodd-Frank Act to require the biggest banks submit detailed plans on how they could be dismantled upon failure during a crisis. The OCC’s proposal would require banks with assets of $50 billion or more to create detailed plans to survive a crisis.
According to the proposed guidelines posted in the Federal Register, the OCC’s guidance would require these large banks to show how different hypothetical crisis scenarios would affect the bank and its recovery. OCC examiners would assess the plan, determining whether the bank has adequately prepared for a wide range of crises and whether the plan is properly integrated with the institution’s overall risk management processes and crisis communications plan.
Read more about the OCC’s proposed recovery plan in the federal register.