Regulator - U.S. banks haven't done enough wind-down planning

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An increasingly vocal chorus of current and former U.S. regulators says the biggest banks still have not provided adequate plans to safely wind down in bankruptcy and may need to be restructured to reduce the risk they pose to the financial system.

Bloomberg News reports that Jim Wigand, a Federal Deposit Insurance Corp. official responsible for planning for the failures of big banks such as JPMorgan Chase, Goldman Sachs and Citigroup, said none have yet been able to draw up bankruptcy plans that wouldn’t threaten to detonate the financial system.

The plans, known as 'living wills', were a core demand of the 2010 Dodd-Frank Act overhaul of financial oversight, and it gave regulators the authority to require systemically risky banks to restructure if their plans aren’t 'credible'.

Whether a global financial giant is able to go through an orderly bankruptcy using a living will is still 'an open question', Wigand said in an interview.

The 11 largest banks filed the first draft of their living wills last year. Wigand, who has announced he will be leaving the agency later this year, said the plans had 'varying levels of quality, although they all had a ways to go'.

Hit the link below to access the complete Bloomberg article:

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