Federal regulators said Wednesday that five of the country’s largest banks, including JPMorgan Chase and Bank of America, still don’t have credible plans for winding down their operations without taxpayer help if they start to fail.
These so-called “living wills” are a critical requirement of the 2010 financial reform package, Dodd-Frank, aimed at preventing a repeat of the taxpayer bailouts that took place during the 2007-08 financial crisis.
The regulators found various problems with the plans submitted by Bank of America, Bank of New York Mellon, JPMorgan Chase, State Street and Wells Fargo.
The rejection appears likely to fuel populist concerns that U.S. banks are still “too big to fail.”
Regulators found shortcomings with Bank of America’s plan, for example, to dismantle its portfolio of derivatives, financial instruments investors can use to make bets. JPMorgan, the country’s largest bank, doesn’t have a credible plan for keeping money flowing through its businesses during a bankruptcy, the regulators said.
