Posted 8 years ago on July 3, 2012, 6:38 p.m. EST by minhaalma
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View Pdf of actual documents here: http://www.federalreserve.gov/bankinforeg/resolution-plans.htm
Living wills for megabanks released
WASHINGTON (CNNMoney) -- Regulators took another step toward ending the era of "too big to fail" Tuesday, releasing so-called living wills, guidelines for unwinding nine of the largest banks doing business in the United States. Banks on Monday had to give regulators copies of their living wills, which will guide regulators on how to resolve a failing but systemically important bank. The Federal Reserve and Federal Deposit of Insurance Corp. released the summaries of these living wills for the megabanks.
The living wills are supposed to spell out exactly how regulators would halt business operations and sell parts of the bank should the bank spiral downward the way Lehman Brothers or Bear Stearns did in 2008. The banks generally state in their resolution summaries that -- in the unlikely situation they don't have enough capital in subsidiaries to cover claims -- money could be raised "by divesting in any of our lines of business," as the summary for JPMorgan Chase stated. However, the juicier details about which subsidiary or business line would get sold first are considered proprietary by banks. Regulators have agreed to keep those details secret. Federal Reserve Board Vice Chairman Dan Tarullo told lawmakers last month that he hopes the the living wills will reveal what holes remain in ending the era of too big to fail. "We're not just going to be able to say, gee, if something bad happens on Thursday, will they be able to resolve by Monday morning?" Tarullo said during a Senate Banking Committee hearing in June. "I think we're going to need to ask ourselves whether the drafting and review of the resolution plans shows us that there are structural elements or features of the organization that could be an impediment to achieving that."
Read entire article here: http://money.cnn.com/2012/07/03/news/economy/bank-living-wills/index.htm