Frequently Asked Questions - Domestic LISCC Firms
Q1. In the resolution planning guidance published in February 2019, the Agencies note that, "The firm may assume that its depository institutions will have access to the Discount Window only for a few days after the point of failure to facilitate orderly resolution. However, the firm should not assume its subsidiary depository institutions will have access to the Discount Window while critically undercapitalized, in FDIC receivership, or operating as a bridge bank, nor should it assume any lending from a Federal Reserve credit facility to a non-bank affiliate."
For purposes of resolution liquidity planning, may a depository institution that is not critically undercapitalized, in FDIC receivership or operating as a bridge bank, assume borrowings from the Discount Window if at the time of such borrowings there are either (i) permissible, funded 23A/B transactions or (ii) permissible, pre-existing revolving 23A/B transactions, outstanding between it and a non-bank affiliate?
A1. Yes. For purposes of resolution liquidity planning only, a depository institution in the condition you describe may assume access to the Discount Window, including in the circumstances in which, at the time of such borrowing there are either (i) permissible, funded 23A/B transactions or (ii) permissible, pre-existing revolving 23A/B transactions, outstanding between it and a non-bank affiliate.
The purpose of the clause in the question "nor should it assume any lending from a Federal Reserve credit facility to a non-bank affiliate" is not to impose any new or different conditions for resolution planning purposes than those that already exist in applicable regulations (Regulation A and Regulation W). The purpose of this clause is simply to denote that the type of lending from the Federal Reserve that can be assumed for resolution planning purposes is only Federal Reserve lending under Section 10B of the Federal Reserve Act, which only permits Federal Reserve lending to depository institutions.