What Is Single Point of Entry in Bank Resolution?

Single Point of Entry is the federal government’s plan for shutting down a failing giant bank without crashing the economy or spending taxpayer money. Under this bank resolution strategy, developed by the FDIC under Title II of the Dodd-Frank Act, regulators seize only the parent holding company at the top of the corporate structure. Shareholders and unsecured creditors of that parent absorb the losses. The parent’s long-term debt gets converted into equity in a newly chartered “bridge” company, which steps into the parent’s shoes. The consumer-facing banks, broker-dealers, and other subsidiaries underneath keep operating normally throughout. No U.S. mega-bank has actually been resolved this way, but the strategy shapes how the largest institutions are structured, capitalized, and regulated today.

Which Banks the Strategy Targets

SPOE is built for the largest and most interconnected financial firms, the ones the Federal Reserve designates as Global Systemically Important Banks (G-SIBs). As of early 2026, eight U.S. banking organizations carry that designation: JPMorgan Chase, Bank of America, Citigroup, Wells Fargo, Goldman Sachs, Morgan Stanley, Bank of New York Mellon, and State Street.¹ These firms face the strictest capital rules in the country, must file detailed resolution plans, and must structure their holding companies in ways that make an SPOE resolution feasible if the day ever comes.

The framework does not apply to ordinary community or regional banks. When Silicon Valley Bank and Signature Bank failed in 2023, they were handled under the Federal Deposit Insurance Act, not Title II, because they were not G-SIBs.

How a Resolution Gets Triggered

The government cannot simply seize a financial company on its own initiative. Launching a Title II resolution requires what is sometimes called the “three keys” process: two federal agencies must jointly recommend action, and then the Treasury Secretary, in consultation with the President, makes the final call.

The Federal Reserve Board is always one of the two recommending agencies. The second depends on the type of firm: the FDIC for a banking organization, the SEC for a broker-dealer, or the Treasury’s Federal Insurance Office for an insurance company.² Their written recommendation must show the firm is in default or heading there, that its failure would damage financial stability, and that a private-sector rescue or ordinary bankruptcy would not suffice.³

If the failing firm’s board consents, the FDIC is appointed receiver immediately. If the board resists, the Treasury Secretary must petition the U.S. District Court for the District of Columbia. The court’s review is narrow, using the “arbitrary and capricious” standard, and if the judge does not rule within 24 hours the appointment is granted automatically.⁴ That short fuse exists because a failing mega-bank cannot sit in legal limbo while markets open Monday morning.

What Happens at the Holding Company

Once appointed, the FDIC takes control of the parent holding company. Only the parent. This is the “single point” in Single Point of Entry: one entity is placed into receivership so the rest of the corporate group can keep functioning.

The parent’s shareholders and unsecured creditors do not carry over to the new structure. They become claimants against the receivership estate and are the ones who absorb the firm’s losses.⁵ Shareholders are wiped out first. Unsecured creditors may see their claims reduced or converted into stock. The design forces private investors, not taxpayers, to bear the cost of the failure.

The Bail-In and the Bridge Company

The recapitalization works through a “bail-in,” a term chosen deliberately to contrast with “bailout.” Rather than injecting public money, the FDIC converts the failed parent’s long-term debt into equity in a newly chartered “bridge financial company.” The bridge entity is a temporary holding company that steps into the failed parent’s role, holding the same subsidiary shares and maintaining the same corporate relationships.

Converting debt to equity gives the bridge company a fresh capital base without the liabilities that sank the original parent. The FDIC has described the goal as completing the transition over a single weekend, ideally between market close on Friday and market open on Monday.⁶

A bridge financial company is not meant to be permanent. Its charter expires after two years, and the FDIC can extend it by up to three additional one-year periods, for a maximum lifespan of five years.⁷ During that window, the FDIC works to stabilize the firm and then sell it, merge it, or take it public. If none of those options materializes, the FDIC winds it down.

Why the Subsidiaries Stay Open

The strategy’s value depends on keeping the operating subsidiaries alive. When a traditional firm files for bankruptcy, cascading defaults can force affiliated entities to shut down. Counterparties tear up contracts, depositors panic, credit markets seize up. SPOE walls off the parent’s legal troubles from the businesses underneath.

Consumer-facing banks, broker-dealers, and asset managers remain open and solvent throughout the resolution. Depositors access their accounts as usual. Loans continue to be serviced. The bridge company takes over the parent’s role as the source of capital support, so from the subsidiaries’ perspective, the ownership changed but the funding did not.⁵ That continuity is what prevents contagion: no depositor run, no freeze in interbank lending, no gap in the payment and clearing systems the wider economy depends on.

The One-Day Stay on Derivatives

Derivatives, repurchase agreements, and other qualified financial contracts (QFCs) are where a disorderly failure gets dangerous. Under normal rules, when one party becomes insolvent, the counterparty can immediately terminate the contract, seize collateral, and close out positions. If thousands of counterparties do that simultaneously against a G-SIB, the result is a fire sale that can drag down healthy institutions with it.

Title II blocks that. When the FDIC is appointed receiver, counterparties cannot exercise termination rights based solely on the receivership until 5:00 p.m. Eastern Time on the next business day.⁸ Payment and delivery obligations are also suspended during the same window. That one-business-day freeze gives the FDIC time to transfer the QFCs to the bridge company, or to a solvent third party, before counterparties can rush the exits.

The stay blocks only terminations triggered by the receivership itself. If a subsidiary actually fails to make a payment or deliver on its obligations, counterparties retain their normal contractual remedies. Because this statutory stay applies only in a Title II resolution, regulators required G-SIBs to build equivalent protections into their contracts for scenarios that would play out under the Bankruptcy Code. The ISDA Resolution Stay Protocol handles that contractually, with counterparties agreeing in advance to a roughly 48-hour stay on cross-default rights if the parent enters Chapter 11.

TLAC and the Clean Holding Company Rule

An SPOE resolution only works if the parent has enough loss-absorbing capacity to recapitalize the firm. If the balance sheet is too thin, the bail-in math falls apart. That is why U.S. G-SIBs must meet Total Loss-Absorbing Capacity (TLAC) requirements.

The minimum risk-based TLAC requirement is 18 percent of the firm’s total risk-weighted assets, plus a buffer that includes the G-SIB surcharge and the countercyclical capital buffer. A leverage-based floor of 7.5 percent of total leverage exposure, plus a separate buffer, also applies.⁹ To count toward TLAC, debt must be unsecured, issued directly by the holding company, and have at least one year of remaining maturity. Debt maturing within one to two years counts at only half its face value.¹⁰

Alongside TLAC sits the “clean holding company” rule. A covered parent cannot issue short-term debt to outside parties, cannot enter derivatives or other qualified financial contracts directly with third parties, and cannot have its subsidiaries guarantee its debts.¹⁰ A parent cluttered with short-term or interconnected obligations cannot be seized cleanly. The rule forces the parent to be built, from the ground up, to be resolvable.

The Orderly Liquidation Fund and Whether This Is a Bailout

Even with private losses doing the recapitalization, the FDIC may need temporary cash to keep the bridge company running during the transition. The Orderly Liquidation Fund provides that liquidity. The statute authorizes the FDIC to issue obligations to the Treasury to cover short-term needs while the resolution plays out.⁸

Any borrowed funds must be repaid, first from the sale of the failed institution’s assets and then, if a shortfall remains, through risk-based assessments on other large financial companies with $50 billion or more in consolidated assets. Those assessments must be sufficient to pay off the obligations within 60 months of issuance.⁸ The financial industry itself covers any residual cost, and shareholders of the failed firm cannot receive anything until the fund is repaid in full.

Who Gets Paid and in What Order

Claims against the receivership estate are paid in a strict statutory order:

Administrative expenses of running the receivership
Amounts owed to the United States, including repayment of any Orderly Liquidation Fund borrowings
Wages, salaries, and sick or vacation pay for rank-and-file employees, capped at $11,725 per person for work performed in the 180 days before receivership, followed by contributions to employee benefit plans
General unsecured creditors, including senior bondholders
Subordinated obligations
Wages and severance owed to senior executives and directors
Equity holders, who recover nothing until every other class is paid in full⁸

The placement of executive compensation below general creditors is a deliberate policy choice. In ordinary bankruptcy, executive pay ranks alongside other employee claims. Congress pushed it down to reduce the moral hazard of executives taking large risks while knowing their own pay is well-protected.

Why Not Just Use Bankruptcy

A fair question is why Title II exists at all when the Bankruptcy Code already handles corporate failures. Speed, scope, and systemic risk are the answers.

In Chapter 11, there is no mechanism to prevent QFC counterparties from immediately exercising cross-default rights when a holding company files. That mass termination event is exactly the shock that can cascade across the financial system. Title II provides a statutory stay that Chapter 11 does not.¹¹ Bankruptcy courts also cannot provide temporary government liquidity through the OLF, and the process moves on a timeline measured in months or years, not a single weekend.

Title II was written as a last resort. The Treasury Secretary must find that bankruptcy would cause “serious adverse effects on financial stability” before invoking the Orderly Liquidation Authority.³ G-SIBs also file resolution plans, known as “living wills,” under Title I of Dodd-Frank demonstrating that they could be resolved through ordinary bankruptcy. SPOE under Title II exists for the cases where that path is too dangerous to attempt.

Whether the strategy would actually work under real crisis conditions is untested. No U.S. G-SIB has been resolved under Title II since Dodd-Frank was enacted in 2010. The SPOE framework has shaped how the biggest banks are built and capitalized, but the real-world test of resolving a globally interconnected trillion-dollar institution over a single weekend has not yet come.

1
Federal Reserve Board. Global Systemically Important Banks
2
Federal Deposit Insurance Corporation. Overview of Resolution Under Title II of the Dodd-Frank Act
3
Office of the Law Revision Counsel. 12 U.S. Code 5383 – Systemic Risk Determination
4
Office of the Law Revision Counsel. 12 USC 5382 – Judicial Review
5
Federal Deposit Insurance Corporation. The Orderly Resolution of Global Systemically Important Banks: An Update from the FDIC
6
Federal Deposit Insurance Corporation. Resolution Readiness and Lessons Learned from Recent Large Bank Failures
7
GovInfo. 12 USC 5390 – Powers and Duties of the Corporation
8
Office of the Law Revision Counsel. 12 USC 5390 – Powers and Duties of the Corporation
9
Federal Register. Regulatory Capital Rule (Regulation Q) – Risk-Based Capital Surcharges for Global Systemically Important Bank Holding Companies
10
Federal Register. Total Loss-Absorbing Capacity, Long-Term Debt, and Clean Holding Company Requirements for Systemically Important U.S. Bank Holding Companies
11
Federal Register. Resolution of Systemically Important Financial Institutions – The Single Point of Entry Strategy