FDIC’s Gruenberg Delivers Remarks on Large Regional Bank Stability Risks

Federal Deposit Insurance Corporation (FDIC) Chairman Martin Gruenberg recently delivered remarks titled “The Resolution of Large Regional Banks — Lessons Learned” at the Brookings Institution Center on Regulation and Markets. Chairman Gruenberg noted that “while regional banks may not be as large, complex, and internationally active as the Global Systemically Important Banks – or G-SIBS as they are called – they would pose distinct and significant challenges in resolution that could raise serious financial stability risks.” Gruenberg noted these issues surfaced in early 2023 and added that the events of the last several months have increased the need to examine and improve upon the resolution of large regional bank entities in the U.S.

Gruenberg stated that in response to the common findings, the FDIC and other banking regulators were looking at the capital treatment of unrealized losses, long-term debt requirements, and resolution plans for large regional banks. The Chairman also expressed concern regarding the large amount of uninured deposits the three banks held which lead to higher than normal liquidity risks. Gruenberg concluded by noting “the failure of three large regional banks this spring, and the need to exercise a systemic risk exception to protect uninsured depositors at two of them, demonstrated clearly the risk to financial stability that large regional banks can pose.”

Click here to read Chairman Gruenberg’s remarks on large regional bank stability risks.