OCC proposes rescinding recovery plan rule for mid-sized banks

Key Insight: The Office of the Comptroller of the Currency will rescind many rules governing large banks' recovery plans, continuing a broader trend among financial regulators toward reducing compliance burdens.

Supporting data: The Biden administration had lowered the asset threshold for submitting recovery plans to $100 billion following the failures of Silicon Valley Bank, Signature Bank, and First Republic in 2023 — events that exposed risk mismanagement at institutions below the former $250 billion threshold.

Forward look: The rule will be open for comment for 30 days after publication in the Federal Register.

The Office of the Comptroller of the Currency proposed a rule to rescind a 2024 rule requiring banks with at least $100 billion of assets to submit recovery plans — detailed strategies for rebuilding a faltering bank in times of stress. 

The rule, which will be open for public comment for 30 days after publication in the Federal Register, would repeal the Biden-era rule and revert to the previous guidelines — established in 2018 — which require banks with more than $250 billion of assets to submit recovery plans.

"Banks are in the business of risk management and are constantly assessing and adjusting their operations to adapt to evolving risk factors and conditions," an agency bulletin announcing the move stated. "Relieving covered banks of the obligation to engage in prescriptive recovery planning activities will further restore the risk management function to bank management's control and enhances resource availability that can be directed towards improving risk management operations and other productive activities."

In announcing the proposal, the OCC reminded firms that its existing safety and soundness standards require banks to effectively manage risk in times of stress, saying, "the duplication of these principles in the Guidelines can be eliminated without undermining the structural integrity of prudential regulation of covered banks." The agency continues to expect firms to address material risks to their survival absent formal regulation. 

The move would not alter the OCC's stance on submission of resolution plans — a similar but distinct requirement that banks submit detailed plans for how to resolve the bank should it fail. 

The rule comes pursuant to President Trump's Executive Order 14192, titled ''Unleashing Prosperity Through Deregulation," that directs agencies to rescind at least ten regulations for every new proposed rule that could impose costs on regulated entities. 

Recovery planning requirements issued in 2016 originally applied to all banks with $50 billion or more in assets. In 2018 under Trump's first term, the agency raised the threshold to $250 billion, arguing in "its view, at that time, that these larger, more complex and potentially more interconnected banks presented greater systemic risk to the financial system and would benefit most from recovery planning."

Politics and policy

FDIC narrows bank resolution plan requirements

April 18, 2025 4:37 PM

The decision by Biden regulators to lower the threshold to $100 billion came after a number of banks with assets below $250 billion in assets experienced significant instability in March 2023. For example, Silicon Valley Bank's failure in March 2023 was the second largest bank failure in U.S. history, and the bank had just over $200 billion in assets at the time of its failure and cost the FDIC's Deposit Insurance Fund an estimated over $16 billion. 

Following the failure — which triggered a regional banking crisis that included the failures of Signature Bank and First Republic Bank — FDIC has since sold SVB's assets to First Citizens BancShares.

The move comes after the Federal Deposit Insurance Corp. narrowed the requirements big banks must follow when submitting resolution plans, a move meant to streamline the process and better position the agency to swiftly sell a collapsing bank over a weekend.

As part of the shift, the agency is eliminating the need for banks to include hypothetical failure scenarios and bridge bank strategies in their next round of resolution plans. Under the requirements, banks become subject to FDIC resolution planning rules once they reach $50 billion in total assets, based on the average of their last four quarterly reports. After crossing this threshold, they are designated as Covered Insured Depository Institutions — or CIDIs — and must submit a full resolution plan within at least 270 days of notification. The rule maintains oversight of midsize banks, as was the standard in the last administration, reflecting lessons from 2023.