Big US banks submit "living wills" to regulators

Associated Press + More

By ALEX VEIGA, Associated Press


The Federal Deposit Insurance Corp. released summaries of the "living wills" on Tuesday for Bank of America, Barclays, Citigroup, Credit Suisse, Deutsche Bank, Goldman Sachs, JPMorgan Chase, Morgan Stanley and UBS.


The government is trying to prevent another situation in which taxpayers are asked to provide bailouts to banks, which is what happened during the 2008 financial crisis. At the time, regulators didn't have rules in place to unwind banks considered "too big to fail."

More than 100 other banks are required to submit living wills by the end of next year. And all banks are required to update their living wills annually or sooner, if there's a material change in the company.

The lenders were asked to detail their assets and debts, how they're tied to other companies, and spell out how they would be wound down in a fast and orderly bankruptcy process.


So what details were included in the summaries?

JPMorgan Chase, the largest U.S. bank by assets, talked about maintaining a "fortress balance sheet" and a sufficient global liquidity reserve to deal with problems that might arise. At the end of last year, it estimated that reserve to be approximately $379 billion.

The bank also declared that its living will "provides for the resolution of the firm in a rapid and orderly way that, in the firm's view, would not pose systemic risk to the U.S. financial system."




The Federal Reserve and FDIC, however, have the last word. If they decide a bank's plan isn't adequate, the regulators can require the company to raise more capital, tamp down on growth, or even sell off units.

The banking industry has criticized the living wills as a pretext for allowing the government to split up big banks. On the other side, different critics say that the living wills don't go far enough, because they don't address the underlying issue that banks are too big.

The summaries can be viewed here:


AP Economics Writer Martin Crutsinger contributed to this report from Washington.
