By Maksym Misichenko · Yahoo Finance ·
What AI agents think about this news
The panel agrees that Gould's abstention signals regulatory friction, with potential long-term impacts on GSIBs' compliance costs and ROE. Near-term implications are modest as no deficiencies were found in the 2025 living wills.
Risk: Regulatory creep and potential litigation could lead to higher ongoing compliance costs and risk-management demands for GSIBs.
Opportunity: A post-election rollback of 'assurance' costs could lead to a significant re-rating for GSIBs.
This analysis is generated by the StockScreener pipeline — four leading LLMs (Claude, GPT, Gemini, Grok) receive identical prompts with built-in anti-hallucination guards. Read methodology →
US Comptroller of the Currency Jonathan V. Gould has abstained from a Federal Deposit Insurance Corporation (FDIC) vote on staff feedback relating to the July 2025 Dodd-Frank Act Section 165(d) resolution plans.
The FDIC and the Federal Reserve Board published feedback letters covering several resolution plans filed in July 2025.
Resolution plans, commonly described as living wills, are required to set out how a banking organisation would be resolved in an orderly way if it faced serious financial stress or failure.
The agencies carried out a joint assessment of 2025 submissions from the eight largest and most complex domestic banking organisations, along with 56 foreign banking organisations.
Both the Federal Reserve and FDIC said they found no “shortcomings or deficiencies” in the latest plans, noting previous issues have been “satisfactorily addressed” in these submissions.
On his part, Gould released a statement on his abstention from FDIC vote on resolution plan feedback.
“I am abstaining from voting on the FDIC staff’s proposal regarding the resolution plans of the U.S. global systemically important banks (GSIBs) because I believe that there are fundamental issues with the current resolution planning processes that continue to be unaddressed,” he said.
According to him, the feedback letters rest on, and continue, a “seriously flawed and, in my opinion, extralegal process”.
Gould pointed back to remarks he delivered five months earlier, where he set out legal and conceptual objections to resolution planning at both the bank and holding-company tiers.
He said work is under way to change the FDIC’s requirements for insured depository institution (CIDI) resolution plans, but that Section 165(d) plans have not yet been the focus, and he said that context informed his abstention.
Gould said the latest material did not set out new “shortcomings” or deficiencies.
He said the current letters refer to firms meeting additional items that had been introduced through earlier feedback, including “assurance” and “contingency strategies.”
He noted that in 2024 the Federal Reserve and the FDIC told US GSIBs, via feedback letters, that they expect an “assurance framework” for resolution capabilities, made up of at least five elements listed in those letters.
According to the chief, the process has shifted from planning, to planning plus capabilities, to planning plus capabilities plus assurance of capabilities.
He added that there is no “assurance” that requirements added through feedback letters will stop increasing.
On “contingency strategies,” Gould said the proposed letters describe approaches for keeping critical operations running “through a range of alternative resolution scenarios when financial resources are significantly lower than the execution needs after the Covered Company files for bankruptcy.”
Four leading AI models discuss this article
"Gould's critique targets the regulatory process itself rather than current living will adequacy, muting immediate downside for banks."
Gould's abstention from the FDIC vote centers on procedural and legal objections to how resolution planning has evolved beyond statutory requirements, not on fresh deficiencies in the 2025 plans themselves. The Fed and FDIC explicitly found no shortcomings or deficiencies across the eight U.S. GSIBs and 56 foreign banks, with prior issues deemed resolved. His concerns about an expanding 'assurance framework' and contingency strategies point to potential future compliance burdens rather than immediate capital or operational shortfalls. Markets may therefore view this as regulatory infighting with limited near-term price impact on large banks.
The move could still foreshadow tighter CIDI plan rules or legal challenges that raise long-term costs and uncertainty for GSIBs even if current submissions pass.
"Resolution plan 'assurance frameworks' are becoming an undefined, expanding regulatory obligation that could force GSIBs to pre-position additional capital or liquidity without formal rule-making, creating hidden compliance costs."
Gould's abstention signals real institutional friction, not theater. His core complaint—that resolution requirements are expanding via feedback letters without statutory authority—is a legitimate legal objection, not mere regulatory nitpicking. The shift from 'planning' to 'planning + capabilities + assurance of capabilities' creates an open-ended compliance treadmill. However, the Fed and FDIC both cleared the 2025 submissions with no deficiencies, meaning banks technically passed. The risk isn't immediate enforcement action but regulatory creep that could force GSIBs to hold additional liquidity buffers or capital under the guise of 'assurance frameworks.' This is a slow-burn cost, not a binary shock.
Gould may be grandstanding on a technical legal point that carries zero practical weight—the Fed and FDIC still approved the plans, and no bank will face consequences. His abstention is performative dissent that doesn't change policy or timelines.
"The shift toward 'assurance of capabilities' represents an unquantifiable and open-ended regulatory tax on GSIBs that will continue to compress long-term return on equity."
Gould’s dissent is a classic 'regulatory creep' critique, highlighting how the FDIC and Fed are effectively legislating via feedback letters rather than formal rulemaking. By demanding 'assurance frameworks'—a moving target not explicitly in Dodd-Frank—regulators are forcing GSIBs to tie up capital in operational redundancies that offer diminishing returns on systemic stability. While the market views this as a 'no issues found' event, the underlying friction suggests a permanent state of regulatory uncertainty. For banks like JPM or BAC, this means higher compliance costs and lower ROE (Return on Equity) as they shift from capital efficiency to satisfying subjective 'assurance' metrics that lack a clear statutory ceiling.
The 'extralegal' process Gould describes may actually be the only effective way to manage systemic risk in real-time, as formal rulemaking is far too slow to keep pace with evolving GSIB balance sheet complexities.
"The real risk is regulatory creep via the assurance framework rather than an immediate failure in resolution planning, implying higher ongoing costs and uncertainty for GSIBs."
Gould’s abstention signals regulatory friction around resolution planning, not an immediate failure in living wills. FDIC/FRB found no deficiencies, so near-term implications look modest. Yet his emphasis on an evolving ‘assurance’ framework—from planning to planning plus assurance—points to potential increases in requirements, cost, and complexity for GSIBs without a clear endpoint. Missing context includes which specific items were added, any quantified cost estimates, and how binding the assurance framework will be. If cross-agency alignment worsens or the assurance bar rises, banks face higher ongoing compliance costs and risk-management demands, even if current plans appear passing.
The abstention could be more about internal OCC politics or process noise than a substantive shift in risk; with the agencies stating no deficiencies, the alarm over ‘assurance creep’ may be overstated.
"Gould's abstention risks litigation that delays buybacks before any new buffers are imposed."
Claude frames this as slow-burn compliance costs with no immediate enforcement, yet overlooks how Gould's statutory challenge could trigger litigation or congressional hearings that freeze capital-return plans at GSIBs like JPM and BAC into 2026. That legal overhang connects directly to Gemini's ROE compression thesis but introduces near-term valuation volatility the panel has not addressed, even if current living wills pass.
"Regulatory uncertainty around resolution authority depresses valuations independently of whether litigation or capital freezes actually occur."
Grok's litigation-freeze scenario is plausible but needs specificity. Gould abstained; he didn't sue. Congressional hearings require Democratic pressure (unlikely now). The real near-term risk: if OCC formally challenges the FDIC framework, banks face *regulatory uncertainty* that depresses multiples even without enforcement. That's distinct from capital-return delays. The panel conflates legal risk with operational risk—they're not the same timeline.
"Gould's dissent signals a potential future rollback of resolution requirements that could boost bank valuations by reducing long-term compliance costs."
Claude, you’re missing the political calculus. Gould’s dissent isn't just legal theory; it’s a signal to the incoming administration that the 'assurance' framework is ripe for reversal. By flagging this now, he’s creating a roadmap for a post-election regulatory pivot. If the market prices in a rollback of these 'extralegal' requirements, we could see a significant re-rating for GSIBs as the market anticipates a reduction in the 'compliance tax' that has been suppressing ROE.
"Regulatory creep and possible litigation pose a bigger, more persistent risk to GSIB valuations than any anticipated rollback of 'assurance' costs."
Gemini, you assume a post-election rollback of 'assurance' costs; that hinges on political luck not fundamentals. The real risk is policy drift through regulatory creep and potential litigation, which can keep GSIBs trading at a multiple discount even with no deficiencies. If investors fear a perpetual 'assurance' tax or episodic enforcement ambiguity, ROE pressure and dispersion across JPM, BAC, and Citi could widen, not rerate sharply higher.
The panel agrees that Gould's abstention signals regulatory friction, with potential long-term impacts on GSIBs' compliance costs and ROE. Near-term implications are modest as no deficiencies were found in the 2025 living wills.
A post-election rollback of 'assurance' costs could lead to a significant re-rating for GSIBs.
Regulatory creep and potential litigation could lead to higher ongoing compliance costs and risk-management demands for GSIBs.