We also shouldn’t forget that the FDIC is helpless and broke itself, which compounds the problem and shows a double standard on their part. They FDIC will ironically be the one raiding the banks during the next crisis but like to heap burden on them because passing blame is the game today.
Some of the US’s biggest banks still lack a proper plan for bankruptcy, in the event of another major financial crisis, US regulators said on Wednesday.
In the wake of the great recession banks were required to come up with “living wills” to prove they had a credible plan for bankruptcy that would not require another bailout from the taxpayers.
But after reviewing the plans of five institutions – JP Morgan Chase, Wells Fargo, Bank of America, Bank of New York Mellon and State Street Corp – the Federal Reserve and the Federal Deposit Insurance Corp (FDIC) have determined that the banks have yet to meet that requirement.
“The goal to end too big to fail and protect the American taxpayers by ending bailouts remains just that: only a goal,” said Thomas Hoenig, FDIC vice-chairman.
The banks are to submit revised proposals by 1 October.
If these banks do not submit acceptable plans by October, regulators could impose sanctions such as higher capital requirements and restrictions on growth.
Proposals by Barclays, Credit Suisse, Deutsche Bank and UBS are still under review.
Full article: US banks not prepared for another financial crisis, say federal regulators (The Guardian)