What is the purpose of the FDIC's "Resolution Planning" process?

The purpose of the FDIC's "Resolution Planning" process is to develop plans for orderly resolution in the event of a financial institution's failure. This is a critical aspect of maintaining stability within the banking system. The FDIC aims to ensure that a failing bank can be resolved in an efficient manner without requiring taxpayer bailouts or causing significant disruption in the financial markets or economy.

Resolution planning involves creating strategies that detail how asset liquidation, transfer of deposits, and the continuation of critical services can occur in such a scenario. These plans are designed to minimize the impact on consumers and the broader financial system, allowing for a smoother transition and maintaining public confidence in the banking system.

This focus on systematic resolution planning distinguishes it from other areas of banking operations, such as customer service procedures, managing mergers and acquisitions, or assessing capital adequacy. Each of these areas serves different regulatory and operational purposes, but they do not address the specific need for a structured approach to resolving financial institutions that may fail.