Wall Street Banks Pass Living-Wills Test Even as Flaws Flagged
Wall Street Banks Pass Living-Wills Test Even as Flaws Flagged
(Bloomberg) -- Six of the eight biggest U.S. banks must fix “shortcomings” in the resolution plans they submit to show how they could proceed quickly and safely through bankruptcy after a collapse, regulators said Tuesday.
The Federal Reserve and Federal Deposit Insurance Corp. said they’ve approved so-called living wills filed by all eight banks, though Bank of America Corp., Citigroup Inc., Wells Fargo & Co., Morgan Stanley, Bank of New York Mellon Corp. and State Street Corp. weren’t able to produce certain data needed to execute their plans during a crisis. The shortcomings were deemed too minor to trigger sanctions.
No shortcomings were found in the plans filed by Goldman Sachs Group Inc. and JPMorgan Chase & Co.
Key Details
- The six banks will have to fix the flaws by March 31, though none face a “deficiency” finding that could have started a process by which regulators could have forced changes in the way such an institution does business.
- The banks received individual letters, which explain their shortcomings and “confirm the agencies expect to focus on testing the resolution capabilities of the firms when reviewing their next plans.”
- The living-wills process, which began in the wake of the 2008 financial crisis, has come a long way since the early years in which failures were common and bank lawyers regularly feared the outcomes.
- Banks that were singled out for shortcomings in 2017 -- Bank of America, Morgan Stanley and Wells Fargo -- successfully fixed their problems, the agencies said Tuesday.
- The banks have to file their next plans by July 1, 2021.
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To contact the reporter on this story: Jesse Hamilton in Washington at jhamilton33@bloomberg.net
To contact the editors responsible for this story: Jesse Westbrook at jwestbrook1@bloomberg.net, Gregory Mott
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