KeyBank 2015 Annual Report Download - page 28

continue operations uninterrupted. As receiver, the FDIC would establish a bridge financial company for the
failed holding company and would transfer the assets and a very limited set of liabilities of the receivership
estate. The claims of unsecured creditors and other claimants in the receivership would be satisfied by the
exchange of their claims for the securities of one or more new holding companies emerging from the bridge
company. The FDIC has not taken any subsequent regulatory action relating to this resolution strategy under
OLA since the comment period ended in March 2014.
Depositor preference
The FDIA provides that, in the event of the liquidation or other resolution of an insured depository institution, the
claims of its depositors (including claims of its depositors that have subrogated to the FDIC) and certain claims
for administrative expenses of the FDIC as receiver have priority over other general unsecured claims. If an
insured depository institution fails, insured and uninsured depositors, along with the FDIC, will be placed ahead
of unsecured, nondeposit creditors, including the institution’s parent BHC and subordinated creditors, in order of
priority of payment.
Resolution plans
BHCs with at least $50 billion in total consolidated assets, like KeyCorp, are required to periodically submit to
the Federal Reserve and FDIC a plan discussing how the company could be rapidly and orderly resolved if the
company failed or experienced material financial distress. Insured depository institutions with at least $50 billion
in total consolidated assets, like KeyBank, are also required to submit a resolution plan to the FDIC. These plans
are due annually by December 31 of each year. For 2015, these resolution plans, the third required from KeyCorp
and KeyBank, were submitted on December 1, 2015. Annually, in January, the Federal Reserve and FDIC make
available on their websites the public sections of resolution plans for the companies, including KeyCorp and
KeyBank, that submitted plans in the prior December. The public section of the resolution plans of KeyCorp and
KeyBank is available at http://www.federalreserve.gov/bankinforeg/resolution-plans.htm and
https://www.fdic.gov/regulations/reform/resplans/.
Financial Stability Oversight Council
The Dodd-Frank Act created the FSOC, a systemic risk oversight body, to: (i) identify risks to U.S. financial
stability that could arise from the material financial distress or failure, or ongoing activities, of large,
interconnected SIFIs, or that could arise outside the financial services marketplace, (ii) promote market discipline
by eliminating expectations that the U.S. government will shield shareholders, creditors, and counterparties from
losses in the event of failure, and (iii) respond to emerging threats to the stability of the U.S. financial system.
The FSOC is responsible for facilitating regulatory coordination, information collection and sharing, designating
nonbank financial companies for consolidated supervision by the Federal Reserve, designating systemic financial
market utilities and systemic payment, clearing, and settlement activities requiring prescribed risk management
standards and heightened federal regulatory oversight, recommending stricter standards for SIFIs, and, together
with the Federal Reserve, determining whether action should be taken to break up firms that pose a grave threat
to U.S. financial stability.
The Bank Secrecy Act
The BSA requires all financial institutions (including banks and securities broker-dealers) to, among other things,
maintain a risk-based system of internal controls reasonably designed to prevent money laundering and the
financing of terrorism. It includes a variety of recordkeeping and reporting requirements (such as cash and
suspicious activity reporting) as well as due diligence and know-your-customer documentation requirements.
Key has established and maintains an anti-money laundering program to comply with the BSA’s requirements.
16