Federal Deposit Insurance Corporation (FDIC) and Bank of England have signed a memorandum of understanding (MOU) to expand their cooperation in resolving problems of troubled deposit-taking financial institutions in compliance with the laws and regulations of the US and the UK.
FDIC and Bank of England recognize importance of close and effective communication about the operations of financial institutions covered by the MOU and differing national laws, consultation on developing issues, cooperative contingency planning for firms covered by the MOU, and supporting the development of appropriate recovery and resolution plans.
Sheila Bair, chairman of FDIC, said: “The recent financial crisis demonstrates that greater international coordination among resolution authorities as well as resolution processes capable of resolving the largest, most complex financial institutions are necessary to protect the public.
“This MOU is an invaluable step forward toward implementing the recommendations of the Basel Committee’s Cross Border Resolution Group, which the FDIC co-chaired. It is also a further step in support of the continuing work of the Financial Stability Board’s Crisis Management Working Group, chaired by Paul Tucker of the Bank of England.”
Mervyn King, governor of Bank of England, said: “A key legislative response in the UK to the recent financial crisis has been the adoption of a special resolution regime that enables failed UK banks to be resolved in the public interest.
“The Bank of England has in consequence become a resolution authority in the UK and, as such, it makes good sense to develop close relationships with other resolution authorities so that the toolkit and powers now available to us can be applied effectively to large and complex cross-border banks. The MOU should also help to enhance coordination with other regulatory authorities in the US and the UK.”