'Living wills' for five out of eight big banks fail U.S. regulators' test

[Lodestar]

Source: Reuters

Five out of eight of the biggest U.S. banks do not have credible plans for winding down operations during a crisis without the help of public money, federal regulators said on Wednesday, saying the institutions could face stricter oversight if they do not fix their plans.

The "living wills" that the Federal Reserve and Federal Deposit Insurance Corporation jointly agreed were not credible came from Bank of America (BAC.N), Bank of New York Mellon (BK.N), J.P. Morgan Chase (JPM.N), State Street (STT.N), Wells Fargo (WFC.N).

The requirement for a living will was part of the Dodd-Frank Wall Street reform legislation passed in the wake of the 2007-2009 financial crisis, when the U.S. government spent billions of dollars on bailouts to keep big banks from failing and wrecking the U.S. economy.

"The FDIC and Federal Reserve are committed to carrying out the statutory mandate that systemically important financial institutions demonstrate a clear path to an orderly failure under bankruptcy at no cost to taxpayers," FDIC Chairman Martin Gruenberg said in a statement. "Today’s action is a significant step toward achieving that goal."


Read more: http://www.reuters.com/article/us-usa-banks-idUSKCN0XA1B4

[bemildred]

1. Yeah, they will stall as long as they can on that.

That would end the "too big to fail" excuse for good.

[UpInArms]

2. More on privatizing profits and

Socializing risks

[turbinetree]

3. Hell...........................what else in new...................................

why should they be in compliance , it's just appalling that with all of there money, which, I might add comes from you and me, they can't even get a "living will" (what a nice play on words) put together, and the public has to wait for this report, to show that they can't get there proverbial s****t together.

If they couldn't even do this simple item on there to do list, just maybe they should be wound down to a more smaller size, so that they know what the hell they are suppose to be doing, since they apparently have know one do it it now.

"The FDIC alone determined that the plan submitted by Goldman Sachs (GS.N) was not credible, while the Federal Reserve Board on its own found Morgan Stanley's plan not credible. Citigroup's (C.N) living will did pass, but the regulators noted it had "shortcomings."

"Each plan has shortcomings or deficiencies," said FDIC Vice Chairman Thomas Hoenig in a statement. "No firm yet shows itself capable of being resolved in an orderly fashion through bankruptcy. Thus, the goal to end too big to fail and protect the American taxpayer by ending bailouts remains just that: only a goal."


Goldman Sach's the blood sucking squid.

http://money.cnn.com/2016/01/20/investing/goldman-sachs-bonuses/

"The average compensation for a Goldman Sachs employee in 2015 was $344,511. "


http://www.emolument.com/salary-reports/companies/goldman-sachs/8170

http://www.nytimes.com/2016/01/23/business/dealbook/goldman-sachs-cuts-lloyd-blankfeins-compensation-to-23-million.html



Honk---------------------------for a political revolution Bernie 2016

[mjvpi]

6. Private sector superiority

I read stories like this and I have flashbacks of every Chicago school economist and Reagan disciple who chants the virtues of the private sector over the public sector. Something tells me that these institutions are not run with anything in mind other than short term profit. When confronted with an ineffective bureaucracy, rather than correct the problems that arise from that bureaucracy, we abdicate to the bastions of efficiency and virtue that is multinational corporate capitalism. When we deregulate and get government out of our economic system, these corporations do make more prophets. Like Charles Dickens, Karl Marx and Richard Wolff.

[turbinetree]

9. I agree with your comments.....it's like mass the public lets all go over the proverbial cliff......

and be like lemmings

Honk-----------------------for a political revolution Bernie 2016

[Gothmog]

4. I am glad that the regulators are looking closely at these living wills

To me that means that the system is working.

I know a lawyer who worked on one of the living wills but I do not who she was representing. It looks like she will getting busy again

[allan01]

5. i agree with one of the fed chairs . break them up. the so and sos .

[Recursion]

7. Kashkeri wants them to have to keep more money sitting around

That's not "breaking up" in any real sense (or if it is, the phrase is as meaningless as the NYDN editors think it is). (It's also something Clinton and Sanders agree with him about, for that matter.)

[Saviolo]

8. Regardless of the rest of the story:

The term itself, "Living Will" really sits poorly with me.

The lawyers for the corporations when drafting the Dodd Frank legislation must have really pushed hard for that verbiage. It adds a great deal of credence to "corporate personhood," even going so far as to call the corporation "alive."

[snot]

10. And the penalty is . . .

I got it: how about, all top 10% exec. compensation & benefits are clawed back for the period from when they should have produced an adeuqate plan until they do in fact produce one? Permanently.

And agreed, any bank big enough to warrant a living will should be broken up.

[fasttense]

11. Makes you wonder why normal bankruptcy

Is not good enough for the banks. Why do they need extra special rules for when they f**k up.