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By Jeff Bater
Aug. 2 — Some big banks have an extra year to file their next living wills to the Federal Reserve and the Federal Deposit Insurance Corporation, which granted the extension to provide extra time for the firms to incorporate the agencies' feedback and guidance into the financial distress blueprints.
The regulators announced 38 firms will be required to submit their next resolution plans by Dec. 31, 2017. Previously, the firms were required to submit their next plans by Dec. 31, 2016.
The firms include 36 domestic bank holding companies and foreign banking organizations, as well as two nonbank financial companies designated by the Financial Stability Oversight Council (FSOC). Among the 38 are HSBC Holdings, Prudential Financial, and U.S. Bancorp.
“The agencies expect to provide feedback and guidance based on the firms' December 2015 plans for use in their December 2017 submissions,” the Fed and the FDIC said in a joint news release. “This extension will allow the firms additional time to incorporate feedback and guidance into their next plan submissions.”
In April, the Fed and the FDIC jointly announced determinations and provided firm-specific feedback on the 2015 resolution plans of eight systemically important, domestic banking institutions. Of those eight, JPMorgan Chase & Co., Bank of America Corp. and three other major U.S. banks failed to persuade regulators they could go bankrupt without disrupting the broader financial system (72 BBD, 4/14/16). The banks — also including Wells Fargo & Co., Bank of New York Mellon Corp. and State Street Corp. — have until Oct. 1 to rewrite the plans.
The eight banks are not among the 38 included in the Aug. 2 announcement.
The Dodd-Frank Act requires that bank holding companies with total consolidated assets of $50 billion or more or foreign banks with $50 billion or more in global consolidated assets and nonbank firms designated by the FSOC periodically submit resolution plans, popularly known as living wills, to the FDIC and the Fed.
Living wills must describe the company's strategy for rapid and orderly resolution under the U.S. Bankruptcy Code or other applicable insolvency regime in the event of material financial distress or failure of the company.
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