Banks all over the United States are being required by the Federal Reserve Board and the Federal Deposit Insurance Corporation (FDIC) to submit their "living wills" or contingency plans.
The Federal Reserve Board and the FDIC assessed the contingency plan for each bank last year and found it to be insufficient and quite unrealistic. The banks need to present a plan that can show that they can actually survive bankruptcy "without hurting the broader financial system."
Former FDIC official and now adviser for banks on regulatory matters Robert Burns told Boston Globe, "It's not over yet. We don't know whether the details they actually provide to the agencies are satisfactory," regarding the continuous submission and review of plans being lobbied between agencies until they are foolproof and they adhere to the Dodd-Frank Act.
USA Today reported that twelve of the nation's largest banks already resubmitted their plans and they are up for review. It may take a couple of months for the government agencies to finish reviewing the plans and for the banks to get feedbacks.
Bloomberg reported that JPMorgan, Morgan Stanley, Bank of America Corp. and Credit Suisse Group AG already submitted their new plans.
Citigroup Inc. plans include shrinking "corporate banking to about $300 billion in assets." The plan also includes cutting "retail banking to about $200 billion and sell off broker-dealers."
JPMorgan is set to "resolve the firm quickly and without systemic disruption or taxpayer support."
Boston Globe reported that most banks nationwide are still trying to find a way to reorganize relations "between core units" of their company.
The government agencies that were assigned to review the banks' plans did so in August and they found quite a list of mistakes and are expecting significant improvement with the revised plans.
It is not often that agencies and banks meet for discussion. In fact, banks often complain that they are not given enough feedback and were not even granted meetings in the past. Sources said that the meetings that were held in the past couple of weeks had been "cordial" despite "previous rejections" from the government agencies.
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