Feds publish new ‘living wills’ for five big banks

Feds publish new ‘living wills’ for five big banks
© Greg Nash

The Federal Reserve on Tuesday unveiled new plans from five of the largest U.S. banks detailing how they would wind down without taxpayer bailouts in times of financial distress.

JPMorgan Chase, Bank of America, Wells Fargo, State Street, and Bank of New York Mellon were required by regulators to submit revised “living wills” after their plans were rejected in April.

The Federal Reserve and Federal Deposit Insurance Corporation made public portions of the resolution plans but have not yet made any decisions on whether to accept the new living wills.

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“Neither the confidential nor the public portions of the resolution plans have yet been reviewed by the agencies, which will now begin initiating their process for review,” they said.

The regulators also published documents from Goldman Sachs, Morgan Stanley, and Citigroup, whose plans were accepted in April but needed updates showing how to improve weaknesses.

The living wills are part of the sweeping rules put in place after the financial crisis under the Dodd-Frank Act. The plans are aimed at preventing government bailouts like those seen in 2008.

If the Fed and the FDIC determine that a resolution plan isn't credible or wouldn't facilitate an orderly wind down of operations, they can subject a bank to additional capital requirements.

In its revised plan, JPMorgan said it has taken steps to show how it would be able to wind down its derivatives and trading portfolios by providing the regulators with a detailed analysis.

In its new living will, Wells Fargo said it addressed certain concerns from the regulators by ramping up executive and senior management oversight of the resolution planning process.

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