Wall Street Banks to Resubmit Resolution Plans

The FDIC and the Federal Reserve have the task of reviewing resolution plans submitted by banks, and a recently released statement by Jeremiah O. Norton, Board Member of the Federal Deposit Insurance Corporation (FDIC), revealed that the ‘living wills’ submitted by eleven banks in October 2013, failed to “meet the threshold required under statute that the plans be credible and facilitate an orderly bankruptcy.”

Vice Chairman of the FDIC, Thomas M. Hoenig, noted in a statement that although the banks had submitted thousands of pages of material, their plans failed to provide a “credible or clear path through bankruptcy that doesn’t require unrealistic assumptions and direct or indirect public support”.

The FDIC and Federal Reserve are separately issuing new instructions to these financial institutions – which include Goldman Sachs, JPMorgan Chase, Bank of America, Bank of New York Mellon, Barclays, Citigroup, Credit Suisse, Morgan Stanley, Deutsche Bank, State Street and UBS – to address certain issues in their Resolution Plan submissions due on July 1, 2015.