Two federal agencies have determined that the 2015 resolution plans of Bank of America, Bank of New York Mellon, JP Morgan Chase, State Street, and Wells Fargo aren’t credible or wouldn’t facilitate an orderly resolution if they filed for bankruptcy.
The Dodd-Frank Wall Street reform law passed after the 2008 financial crisis requires plans, also known as “living wills,” for winding down operations during a financial crisis without the help of public funding.
The agencies have issued notices to the five firms detailing the deficiencies in their plans and the actions the firms must take to address them. Each firm must correct its deficiencies by Oct. 1. If a bank doesn’t submit an adequate plan, it may be subject to more stringent requirements, the Federal Deposit Insurance Corporation and the Federal Reserve Board said Wednesday.
Both agencies identified weaknesses in the plans of Goldman Sachs and Morgan Stanley. The FDIC determined Goldman Sachs’ plan wasn’t credible, and the Federal Reserve Board found Morgan Stanley's plan wasn’t credible.
Neither agency found that Citigroup's 2015 resolution plan wasn’t credible, although the agencies did identify shortcomings that the firm must address.
The deadline for the next full plan submission for all eight big banks is July 1, 2017.
