The Federal Deposit Insurance Corp.'s discussion with foreign regulators about cross-border resolutions plans is expanding its efforts beyond just the United Kingdom.
The FDIC seeks to coordinate wind-down mechanisms overseas and is in talks with other jurisdictions where U.S. firms do business and taking an active role in multilateral efforts to develop common resolution standards across many nations.
"Right now the focus is still on the UK, because that's where most of the cross-border exposure still is. But the FDIC is branching out more broadly in Europe," said Randall Guynn, a partner at Davis Polk & Wardwell.
"With nearly 90% of U.S. firms' foreign activities based in London, the FDIC has held talks with U.K. regulators about coordination since before the 2010 Dodd-Frank Act authorized the FDIC's new resolution powers for global systemically important financial institutions. But the remaining 10% - combined with the fact that London offices of U.S. firms can do business in other member countries of the European Union - has forced a broader view," writes American Banker's Joe Adler.
Observers says that attempts to collaborate outside of the U.K. may be more difficult as other nations have no developed resolution processes or deposit insurance systems to the same extent as the U.S.
"It may be the direction we're going in, but we're not far enough along in the evolution of this process to say whether that will happen," said Jay Westbrook, a business law professor at the University of Texas. "One of the most serious complications is that some countries have deposit insurance and a resolution authority and some don't. The terms and amounts of national deposit insurance guarantees also vary greatly between countries. That makes it complicated as to who is responsible for which deposits."
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