The Office of Inspector General (OIG) of the Federal Deposit Insurance Corporation (FDIC) issued its report on FDIC Readiness to Resolve Large Regional Banks.
Readiness to resolve large regional banks is key to the FDIC’s mission of maintaining stability and public confidence in the U.S. financial system. In Spring 2023, the FDIC responded to the unanticipated failures of Silicon Valley Bank (SVB), Signature Bank of New York (Signature), and First Republic Bank (First Republic), three of the largest bank failures in FDIC history. The FDIC resolved each bank through a purchase and assumption agreement, facilitated in part by a systemic risk exception for SVB and Signature.
The objective of this evaluation was to assess the FDIC’s readiness to resolve large regional bank failures under the Federal Deposit Insurance (FDI) Act, prior to the failures of SVB, Signature, and First Republic.
We determined the FDIC’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. We found that at the time of the Spring 2023 failures, the FDIC had not ensured that it fully met its human and technology resource needs or that it sufficiently coordinated resources among its divisions and offices. The FDIC could have been more effective in demonstrating its readiness to resolve large regional bank failures by:
- completing, communicating, and coordinating the regional resolution framework guidance;
- improving large regional bank resolution plans;
- training key staff on their resolution roles;
- conducting interdivisional exercises to test resolution procedures; and
- periodically evaluating and monitoring large bank resolution readiness.
Improving operational readiness will enhance the FDIC’s ability to conduct resolutions in the most efficient and effective manner, reduce strain on staff, and strengthen interdivisional relationships. We made 11 recommendations to the FDIC to address the findings in our report. The FDIC concurred with all of our recommendations and plans to complete corrective actions by June 30, 2026.