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The Federal Reserve has found weaknesses in the plans laid out by Bank of America, Citigroup, Goldman Sachs and JPMorgan Chase for how they would handle their own failures.
The US central bank and the Federal Deposit Insurance Corporation on Friday said that, among the eight largest US banks, they spotted shortcomings in the so-called “living wills” of those four lenders.
The FDIC viewed the weakness in Citi’s so-called “living will” as the most serious, saying the lender’s resolution plan was not credible or would not facilitate an orderly resolution under the US Bankruptcy Code.
However, while the FDIC viewed the weakness as a “deficiency” that undermined the feasibility of the plan, the Fed said the issues were not as severe and were only a “shortcoming” that raised questions of feasibility and did not entirely undermine the lender’s resolution strategy.
Living wills were introduced in the aftermath of the financial crisis of 2008 to prevent the failure of a major lender bringing down the entire system.
The regulators said the lenders had until July 1 2025 to address the shortcomings.
This is a developing story
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