![](\"https:\/\/cdn.rt.com\/files\/2016.04\/thumbnail\/570f169ac3618803558b461a.jpg\")
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Wary of a repeat of taxpayer bailouts for \u201ctoo big to fail\u201d banks, the Federal Reserve and Federal Deposit Insurance Corporation issued a first-time joint statement criticizing five top banks\u2019 strategies for avoiding bankruptcy as \u201cnot credible.\u201d<\/p>\n
The five banks, JPMorgan Chase & Co., Bank of America Corp., Wells Fargo & Co., Bank of New York Mellon Corp. and State Street Corp., with a total of about $5.6 trillion in assets, were among eight bank whose plans were evaluated.<\/p>\n
\u201cThe agencies have jointly determined that each of the 2015 resolutions plans of\u2026 [the five banks] was not credible or would not facilitate an orderly resolutions under the US Bankruptcy Code, the statutory standard established in the Dodd-Frank Wall Street Reform and Consumer Protection Act,\u201d<\/em>\u00a0said<\/a> the Federal Reserve and the FDIC in a press release on Wednesday.<\/p>\n Under the Dodd-Frank Act, a bank with total consolidated assets of $50 billion must have a plan, or a \u201cliving will,\u201d<\/em> in the event of bankruptcy. Nearly a decade after the financial crisis, and a slow recovery for the economy, Washington is keen to avoid a repeat of the bank bailouts.<\/p>\n \u201cThe FDIC and Federal Reserve are committed to carrying out the stator mandate that systematically important financial institutions demonstrate a clear path to orderly failure under bankruptcy at no cost to taxpayers,\u201d<\/em> FDIC Chairman Martin Gruenberg said in a statement, according to Reuters. \u201cToday\u2019s action is a significant step toward achieving that goal.\u201d<\/em><\/p>\n The agency\u2019s vice chairman, Thomas Hoenig, told Reuters, however, the plans showed that no firm is \u201ccapable of being resolved in an orderly fashion through bankruptcy.\u201d<\/em><\/p>\n \u201cThe goal to end \u2018too big to fail\u2019 and protect the American taxpayer by ending bailouts remains just that: only a goal,\u201d<\/em> he said.<\/p>\n Reuters reported<\/a>\u00a0the banks failed in 2008 for reasons \u201cranging from the way liquidity would be housed and shuffled among domestic and foreign subsidiaries to the manner in which executives would communicate problems as they arose during a crisis.\u201d<\/em><\/p>\n Banks have until October 1 to resolve the weaknesses of their plans and if they fail to meet the deadline, they are \u201csubject to more stringent prudential requirements.\u201d<\/em><\/p>\n Those requirements could be leverage, stringent capital or liquidity requirements, as well as restrictions on growth, activities or operations of the firm or its subsidiaries. If deficiencies persist for two years, then the banks will have to divest their assets. Today\u2019s announcement is the start of a regulatory chain that could end with breaking up the banks.<\/p>\n Weaknesses were also identified by regulators in resolution plans for Goldman Sachs and Morgan Stanley, but the Fed and FDIC did agree on the deficiencies. The FDIC said<\/a>\u00a0the plan submitted by Goldman Sachs was \u201cnot credible\u201d<\/em> and \u201cwould not facilitate an orderly resolution\u201d<\/em> for bankruptcy. The Fed said Morgan Stanley\u2019s plan was \u201cnot credible.\u201d<\/em><\/p>\n “We’re going to do everything possible to fix this issue,”<\/em> said Jamie Dimon, CEO of JPMorgan, on a call with analysts Wednesday. “We have tons of liquidity. It’s more about reporting legal entities.”<\/em><\/p>\n Wells Fargo said it has made strides to get up to code, and it will meet the October 1 deadline.<\/p>\n “We were disappointed to learn that our 2015 resolution plan submission was determined to have deficiencies in certain areas,”<\/em> a spokesman for Wells Fargo told<\/a> CNN Money. “We understand the importance of these findings and we will address them.”<\/em><\/p>\n Citigroup\u2019s resolution plan received the least criticism from regulators.<\/p>\n Regulators are also continuing to asses the plans of four foreign banking organizations \u2013 Barclays PLC, Credit Suisse Group, Deutsche Bank AG and UBS.<\/p>\n<\/div>\n Via RT<\/a>. This piece was reprinted by RINF Alternative News<\/a> with permission or license.<\/p>\n","protected":false},"excerpt":{"rendered":" Wary of a repeat of taxpayer bailouts for \u201ctoo big to fail\u201d banks, the Federal Reserve and Federal Deposit Insurance Corporation issued a first-time joint statement criticizing five top banks\u2019 strategies for avoiding bankruptcy as \u201cnot credible.\u201d The five banks, JPMorgan Chase & Co., Bank of America Corp., Wells Fargo & Co., Bank of New […]<\/p>\n","protected":false},"author":1,"featured_media":237853,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[519],"tags":[],"class_list":{"0":"post-237852","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-newswire"},"_links":{"self":[{"href":"http:\/\/rinf.com\/alt-news\/wp-json\/wp\/v2\/posts\/237852","targetHints":{"allow":["GET"]}}],"collection":[{"href":"http:\/\/rinf.com\/alt-news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/rinf.com\/alt-news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/rinf.com\/alt-news\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"http:\/\/rinf.com\/alt-news\/wp-json\/wp\/v2\/comments?post=237852"}],"version-history":[{"count":0,"href":"http:\/\/rinf.com\/alt-news\/wp-json\/wp\/v2\/posts\/237852\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"http:\/\/rinf.com\/alt-news\/wp-json\/wp\/v2\/media\/237853"}],"wp:attachment":[{"href":"http:\/\/rinf.com\/alt-news\/wp-json\/wp\/v2\/media?parent=237852"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/rinf.com\/alt-news\/wp-json\/wp\/v2\/categories?post=237852"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/rinf.com\/alt-news\/wp-json\/wp\/v2\/tags?post=237852"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}