WASHINGTON — The Federal Deposit Insurance Corp. on Monday announced plans for two "working group" meetings this year with European Commission officials to discuss cross-border resolution efforts and other issues related to international coordination.
The agency provided very rough details about the first such meeting that took place Feb. 20, at which topics included a recent EC proposal on resolving financial firms, the FDIC's development of new powers to wind down global companies and "deposit guarantee regimes."
The new working group is another step by the FDIC to communicate more with foreign counterparts as it develops a new resolution facility, authorized by the Dodd-Frank Act, which someday could be used to clean up the operations of a "systemically important financial institution" that has offices in multiple foreign countries.
To date, the focus of most of the agency's public moves to enhance coordination has been talks with the United Kingdom, where the vast majority of the overseas operations of U.S. firms are based. In December, the FDIC and the Bank of England released a joint paper addressing both countries' support for so-called "single point of entry" resolutions, in which parent companies would be shuttered and their functioning subsidiaries would be transferred to new-formed bridge entity.
"While there is clearly much more work to be done in coordinating SIFI resolution strategies across major jurisdictions, these developments mark significant progress in achieving the type of international coordination that would be needed to resolve effectively a global SIFI in some future crisis situation," FDIC Chairman Martin J. Gruenberg said in a press release, referring to the EC meetings.
In the background of the meetings between FDIC and European officials is a June 2012 proposal by the commission calling on member nations to develop resolution regimes. The proposal would also allow authorities "to take measures in order to facilitate" a company's "resolvability" and require recovery plans to be established by a financial institution based in Europe outlining "arrangements and measures to enable it to take early action to restore its long term viability in the event of a material deterioration of its financial situation."
In the joint press release with Gruenberg, Michael Barnier, a French politician who sits on the commission, said, "The crisis has demonstrated that we need a global reform effort."
"New global rules for a global financial system will only work if they are implemented in a consistent way," Barnier said. "The authorities, which regulate and supervise the world of finance, must co-ordinate their work and co-operate when enforcing rules. The cooperation between the European Commission and the FDIC is an excellent example of such co-operation."
In addition to two expected meetings per year, the FDIC said, the working group will also hold "less formal communications." The next meeting will be held in Brussels, Belgium, but its date is not yet determined.