U.S. regulators to slam banks' emergency bankruptcy plans

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U.S. regulators plan to notify major U.S. banks that their living wills are inadequate, The Wall Street Journal reported Tuesday.

U.S. regulators plan to notify some major U.S. banks, including JPMorgan Chase , that their living wills are inadequate, The Wall Street Journal reported Tuesday, citing sources familiar with the matter.

The Journal reported that the regulatory notifications could come this week, and could "raise the prospect of higher capital requirements or other regulatory sanctions for some of the institutions."

The 2010 Dodd-Frank Act established the need for banks to create living wills that explain how the institution would navigate a potential bankruptcy. The requirement for so-called "resolution plans" applies to banks with total consolidated assets of at least $50 billion and other financial firms named by the Financial Stability Oversight Council, according to the Federal Reserve.

Under Dodd-Frank, the federal government has the power to carve up a bank if regulators do not believe its plan is workable and in recent years they have faulted more than a dozen banks for drafting overly optimistic or not credible plans.

The Journal report said that "at least half of the eight American banks" bearing the global "systemically important" label are "expected to receive a harsh verdict" on their resolution plans.

For more on regulatory scrutiny of banks' living wills, see the Journal's full report.

—Reuters contributed to this report.

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