FDIC, Bank of England to expand cooperation in tackling troubled financial firms

The Federal Deposit Insurance Corporation (FDIC) and the Bank of England have signed a memorandum of

FDIC and the Bank of England have recognised the importance of close and effective communication about the operations of financial institutions by signing the MOU, which acknowledges differing national laws, the need for consultation on developing issues, cooperative contingency planning, 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 the 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."