Feds to big banks: prepare to die
Apparently “too big to fail” does not mean “too big to die.” Federal regulation has forced big banks to prepare “living wills” in view of the possibility of bankruptcy. The first of these wills was due this week.
Businessweek reports,
JPMorgan Chase & Co. (JPM) (JPM), Bank of America Corp. (BAC), Citigroup Inc. (C) (C), Goldman Sachs Group Inc. (GS) (GS), Morgan Stanley (MS) (MS), Barclays Plc (BCS) (BCS), Deutsche Bank AG (DB) (DB), Credit Suisse Group AG (CSGN) and UBS AG (UBSN) are required to file the so-called living wills to the FDIC and the Federal Reserve by July 2, FDIC officials said on a conference call June 29. . . .
Lenders with more than $250 billion in nonbank assets will be the first group of banks to deliver the liquidation plans, expected to run into thousands of pages. The plans, mandated by the Dodd-Frank Act, are meant to give regulators a way to shutter complex financial firms without taxpayer bailouts or market turmoil that followed the 2008 bankruptcy of Lehman Brothers Holdings Inc.
By the end of 2013, a total 125 banks are required to deliver plans for taking their companies into bankruptcy should the need arise, FDIC officials said. The regulators will determine whether each living will represents a credible path to a rapid and orderly closure.