Regulators release 'living wills' for big banks


Under Dodd-Frank, banks must provide the government with a blueprint for a quick dissolution in case they were to fail. That requirement is aimed at avoiding the widespread confusion and haphazard actions that occurred during the financial crisis, in which some of the world's largest financial institutions collapsed and threatened the entire financial system in the process.

By establishing explicit, predetermined wind-down plans for institutions most vital to the overall system, regulators hope to isolate failures while protecting the overall system.

Banks with $50 billion or more in total assets must provide regulators with a living will that will allow the government to step in and quickly wind down the bank while minimizing the collateral damage. When the FDIC approved its rules requiring the plans in September, it said 37 banks with roughly $3.6 trillion in deposits must submit plans.

Additional institutions could join those ranks if regulators determine they are "systemically significant" and merit heightened oversight.

The nine plans released Tuesday mark the first submitted, as banks with over $250 billion in assets were required to meet the July deadline. Banks with over $100 billion in assets need to have plans in place by July 2013, while the remaining institutions will have until the end of 2013 to get their plans in place.