Agencies Publish Resolution Plan Feedback Letters for Certain Domestic and Foreign Banking Organizations

Why It Matters

Deficiency‑free living wills lower systemic risk and reassure investors that large banks have credible resolution strategies, supporting overall financial stability.

Key Takeaways

• No deficiencies found in 2025 resolution plans for major banks
• Derivatives weaknesses from 2023 plans fully addressed
• 56 foreign banks received satisfactory feedback
• Template letters issued for first‑time foreign filers

Pulse Analysis

Regulators have long required large banks to file resolution plans, commonly called living wills, to ensure an orderly wind‑down in a crisis. The FDIC and the Federal Reserve’s joint review of the 2025 submissions marks the most comprehensive assessment to date, covering the eight biggest domestic institutions and over fifty foreign banks operating in the United States. By confirming that each plan meets statutory standards, the agencies reinforce the credibility of the resolution framework that was bolstered after the 2008 financial crisis.

The absence of any identified shortcomings is notable because it signals that the industry has internalized lessons from past stress‑test failures and from the 2023 derivatives‑related deficiencies highlighted for the four biggest U.S. banks. Addressing those weaknesses reduces the likelihood of a contagion scenario where complex derivative exposures could amplify a bank’s collapse. Market participants interpret the clean bill of health as a positive signal, potentially lowering funding costs for the institutions and stabilizing credit spreads across the sector.

Looking ahead, the publication of template letters for foreign banks filing for the first time underscores the regulators’ intent to harmonize resolution expectations globally. As cross‑border banking activities expand, consistent living‑will standards become critical for coordinated resolution efforts among jurisdictions. Ongoing supervisory scrutiny will likely focus on emerging risks such as climate‑related exposures and digital‑asset holdings, ensuring that future living wills remain robust and adaptable to an evolving financial landscape.