Black Friday is Now! Don’t miss out on up to 60% OFF InvestingProCLAIM SALE

U.S. regulators say will review Wall Street 'living wills'

Published 10/04/2016, 06:29 PM
© Reuters.  U.S. regulators say will review Wall Street 'living wills'
BAC
-
JPM
-
STT
-
WFC
-
BK
-

WASHINGTON (Reuters) - Leading U.S. banks on Tuesday submitted updated "living wills" to regulators who must decide whether Wall Street firms can be unwound without taxpayer help or should be broken up.

Eight of the largest banks handed in paperwork on how they would be dissolved in a crisis to the Federal Reserve and Federal Deposit Insurance Corp before those regulators pass judgment in the months ahead.

The eventual ruling from regulators could be definitive for Wall Street, said John Simonson, a former FDIC supervisor.

"This is an existential matter for leading banks," said Simonson, now with PricewaterhouseCoopers. "The issue has the attention at the highest level of these banks."

In April, five banks were told that their living wills fell short.

JPMorgan Chase & Co (N:JPM), Wells Fargo & Co (N:WFC), Bank of America Corp (N:BAC), State Street Corp (N:STT) and Bank of New York Mellon Corp (N:BK) were given until this month to revise their plans.

The Fed and FDIC may issue a grade for those banks before the end of the year, Simonson said, though the entire banking sector will hear from regulators next summer.

Any leading bank that cannot present a living will faces costly penalties and could be set on a course for a breakup within two years.

In documents released on Tuesday, banks detailed how they planned to remedy problems regulators had identified earlier this year.

For instance, JPMorgan said it had "meaningfully simplified" the way it funds entities within the company, especially those based in the U.K. Funding foreign subsidiaries during a time of crisis became an important issue after the bankruptcy of Lehman Brothers, whose U.K. trading business created funding problems.

Wells Fargo & Co (N:WFC) said it had increased staff devoted to resolution planning. The bank also put a senior executive in charge of that office, which now reports directly to the chief financial officer.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.