Biggest U.S. Banks Told to Simplify Their ‘Living Wills’
Wall Street banks were ordered to simplify their structure and revise some practices after failing to satisfy U.S. regulators that they can pass through a bankruptcy without damaging the wider financial system.
Eleven of the largest U.S. and foreign banks including JPMorgan Chase & Co. and Goldman Sachs Group Inc. fell short in the bankruptcy plans known as living wills, the Federal Reserve and Federal Deposit Insurance Corp. said today in a joint statement. The banks need to take “immediate action” to reduce their structural complexities and make their holding companies more resolvable. Those changes are due in their next annual round of filings on July 1, 2015.
“The FDIC and Federal Reserve have taken the most important step to date in this process by issuing joint letters to the 11 largest, most complex banking organizations, directing them to make specific substantive changes to facilitate their orderly resolution in bankruptcy,” FDIC Chairman Martin Gruenberg said in a statement. His agency and the Fed were given power in the 2010 Dodd-Frank Act to require and evaluate the plans, and to order changes at the banks if the plans aren’t credible.
The agencies found last year’s submissions “are not credible” -- the first such response from the regulators since the filing process began in 2012. The plans from all of the banks -- including Bank of America Corp., Morgan Stanley, Citigroup Inc., Deutsche Bank AG, Barclays Plc, Credit Suisse Group AG, UBS AG, State Street Corp. and Bank of New York Mellon Corp. -- had common shortcomings, the agencies said. They also made “unrealistic or inadequately supported” assumptions.
http://www.bloomberg.com/news/2014-08-05/biggest-u-s-banks-told-to-simplify-their-living-wills-.html
