To give them time to correct any weaknesses revealed in recent reports, the deadline for the filing of “living wills” by eight very large U.S. banks was extended to July 1, 2019 Thursday by federal financial regulators.
The Federal Reserve Board and the Federal Deposit Insurance Corp. (FDIC), in announcing the deadline extension (by one year from July 1, 2018) for filing next resolution plans, said it is intended to help the banks “remediate any weaknesses identified in their July 2017 submissions and to prepare and improve their next resolution plan submissions.”
In addition to extending the deadline for the banks — Bank of America, Bank of New York Mellon, Citigroup, Goldman Sachs Group, JP Morgan Chase, Morgan Stanley, State Street Corporation, and Wells Fargo – the federal regulators also extended by a year (to Dec. 31, 2018), the next resolution plan submission deadline for 82 foreign banks with limited U.S. operations.
The “living wills” (or resolution plans), required by the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act, describe an institution’s strategy for rapid and orderly resolution under bankruptcy in the event of material financial distress or failure. Resolution plans of foreign banking organizations are focused on their U.S. operations.
“The agencies continue to explore ways to improve the resolution planning process and believe it is worthwhile to consider extending the cycle for living will submissions from annual to once every two years,” the Fed and FDIC stated in release. “Today’s action is a step toward that end.”
The two agencies also said their review of the July 1, 2017, resolution plan submissions is ongoing, and that the extension “does not affect any actions the agencies may take concerning those plans.”