Feds find major banks don't have a good plan for failing

Before you go, we thought you'd like these...
Before you go close icon

Major Banks Don't Have Solid Plans in Case of Another Financial Crisis

According to federal regulators, several big financial institutions don't have credible plans for safely filing bankruptcy — meaning they might have to get bailed out again if another big financial crash happens.

The Federal Deposit Insurance Corporation and the Federal Reserve both judged the bankruptcy plans for eight of the U.S.'s largest banks. Both agencies unanimously flunked five of the banks, with split decisions on two others; only one bank got a passing grade.

These bankruptcy plans, commonly known as "living wills," are a requirement of 2010's Dodd-Frank financial reform act. They're nominally meant to provide a blueprint to dissolve these institutions in a crisis; but they're also a way to keep the banks from relying too heavily on risky practices.

All eight banks are getting feedback from the regulators on how to fix the deficiencies in their plans. The five banks who failed the worst have until Oct. 1 to implement these suggestions or face stiffer regulations.

This video includes clips from JPMorgan Chase & Co., Citigroup and Wells Fargo.

RELATED: States with the highest and lowest levels of bankruptcies in America

7 PHOTOS
States with the highest and lowest levels of bankruptcies in America
See Gallery
Feds find major banks don't have a good plan for failing

States the most bankruptcies per capita

3. Alabama

(Photo credit: Alamy)

States the most bankruptcies per capita

5. Utah

(Photo credit: Getty) 

States the fewest bankruptcies per capita

2. North Dakota

(Photo credit: Getty)

States the fewest bankruptcies per capita

3. Vermont

(Photo credit: Getty)

States the fewest bankruptcies per capita

Washington, D.C. 

* D.C. was included in this particular study as a "state." 

(Photo credit: Getty)

States the fewest bankruptcies per capita

5. Hawaii

(Photo credit: Getty)

HIDE CAPTION
SHOW CAPTION
of
SEE ALL
BACK TO SLIDE

Read Full Story

Markets

S&P 500 2,361.13 2.56 0.11%
DJIA 20,659.32 -42.18 -0.20%
NASDAQ 5,897.55 22.41 0.38%
DAX 12,223.43 20.43 0.17%
NIKKEI 225 19,063.22 -154.26 -0.80%
HANG SENG 24,301.09 -90.96 -0.37%
USD (per EUR) 1.07 0.00 -0.19%
USD (per CHF) 1.00 0.00 -0.05%
JPY (per USD) 111.09 -0.06 -0.06%
GBP (per USD) 1.24 0.00 -0.02%

Want more news like this?

Sign up for Finance Report by AOL and get everything from business news to personal finance tips delivered directly to your inbox daily!

Subscribe to our other newsletters

Emails may offer personalized content or ads. Learn more. You may unsubscribe any time.

From Our Partners

15 Dirty AF Images That Were Hidden in Cartoons from Your Childhood 15 Dirty AF Images That Were Hidden in Cartoons from Your Childhood
Dog Discovers An Unconscious Bird On The Porch - And Doesn't Hesitate To Save Its Life Dog Discovers An Unconscious Bird On The Porch - And Doesn't Hesitate To Save Its Life
Man Built This Contraption In His Backyard - And Even He Was Surprised How Well It Worked Man Built This Contraption In His Backyard - And Even He Was Surprised How Well It Worked