Bloomberg News reports that the Federal Reserve and Federal Deposit Insurance told the banks Monday that their 2014 resolution plans don’t pass muster because they rely on unrealistic assumptions and inadequate analysis.
The FDIC called the plans 'not credible', and the Fed said the banks must take 'immediate action' to fix their shortcomings.
The living wills, required by the Dodd-Frank Act, are meant to show big banks can be shuttered without threatening the broader financial system. Regulators last year rejected plans submitted by 11 of the largest banks, including JPMorgan and Goldman Sachs, and called for changes similar to those sought from the European banks.
In rejecting the work of HSBC, BNP and RBS, the agencies told them to amend certain financial contracts, make sure their critical internal services can stay intact through a failure and show they can quickly produce reliable information in such an emergency.
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