Federal Watchdogs Flag Major US Banks for Inadequate Crisis Management; Demand Living Will Revisions
Federal authorities have identified significant deficiencies in the crisis management strategies—known as “living wills”—of four major U.S. banks. The Federal Deposit Insurance Corporation (FDIC) and the Federal Reserve have criticized the plans submitted by Bank of America, Citigroup, Goldman Sachs, and JPMorgan Chase, setting a 2025 deadline for necessary revisions.
Major Banks Under Scrutiny: FDIC and Fed Demand Overhauled Living Wills
Living wills, mandated since the 2008 financial crisis and the subsequent Dodd-Frank reforms, require banks to prepare detailed plans for orderly bankruptcy processes without relying on taxpayer bailouts. Recent evaluations by the FDIC and the Fed have highlighted significant weaknesses in the strategies of these banking giants, raising concerns about their ability to effectively manage systemic risks.
One of the most critical evaluations was directed at Citigroup, whose plan was deemed lacking in credibility and unable to ensure an orderly resolution under the U.S. Bankruptcy Code. This assessment underscores the heightened regulatory expectations. Despite these setbacks, the banks are committed to addressing the deficiencies. Citigroup has acknowledged the need to improve data quality and regulatory frameworks to meet federal standards.
“We’ve acknowledged that we need to accelerate our work in certain areas, including improving data quality and regulatory processes such as resolution planning,” Citigroup stated. “We continue to have confidence that Citi could be resolved without an adverse systemic impact or the need for taxpayer funds,” the bank added.
As the 2025 deadline approaches, these financial institutions are expected to revamp their resolution plans, focusing on contingency measures and securing the necessary approvals from international authorities to implement their strategies. This directive follows last year’s financial disruptions, which included the collapses of Silvergate Bank, Silicon Valley Bank, First Republic Bank, and Signature Bank.
