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OCC Bulletin 2023-29
August 29, 2023
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Chief Executive Officers of All National Banks, Federal Savings Associations, and Federal Branches and Agencies; Department and Division Heads; All Examining Personnel; and Other Interested Parties
On August 29, 2023, the Office of the Comptroller of the Currency (OCC), the Board of Governors of the Federal Reserve System (the board), and the Federal Deposit Insurance Corporation (collectively, the agencies) issued a joint notice of proposed rulemaking that would require certain large depository institution holding companies, U.S. intermediate holding companies of foreign banking organizations (collectively, large banking organizations [LBO]), and certain insured depository institutions (IDI) to issue and maintain an outstanding minimum amount of long-term debt (LTD). The LTD requirement would improve the resolvability of these LBOs and IDIs in case of failure, reduce costs to the Deposit Insurance Fund, and mitigate contagion and financial stability risks by reducing the risk of loss to uninsured depositors.
The agencies encourage stakeholders to review the proposed rule and provide comments before the close of the comment period on November 30, 2023.
The proposed rule would not apply to community banks.
The agencies are proposing a rule to improve the resolvability of LBOs and certain large IDIs (collectively, banks) by requiring a minimum amount of LTD that can absorb losses in the event of failure.
In providing loss-absorbing capacity, LTD can give policymakers greater flexibility in responding to bank failures. In the resolution of an IDI, sufficient LTD issued and maintained by an IDI that consequently fails may increase the likelihood of an orderly resolution for the IDI. In addition, the proposed LTD requirement could improve the resilience of banks by enhancing the stability of their funding profile and strengthening market discipline.
Please contact Joanne Phillips, Counsel, Chief Counsel’s Office, at (202) 649-5490, or Andrew Tschirhart, Risk Expert, Capital and Regulatory Policy, at (202) 649-6370.
Senior Deputy Comptroller and Chief Counsel
1 Refer to 82 Fed. Reg. 8266.
2 The LTD requirement for U.S. GSIBs’ LBOs and intermediate holding companies of foreign GSIBs established by the board’s total loss absorbing capacity rule would remain unchanged.