Yesterday, the Federal Reserve and the FDIC (collectively, “Agencies”) released their feedback on the resolution plans submitted July 1, 2015 by the eight largest US banking institutions. Five were deemed “not credible,” while all eight were found to have “deficiencies” or “shortcomings” (or both). The timeline for remediating some of the cited deficiencies will be very challenging, even considering the provided relief from having to file a plan on July 1, 2016.
- Five plans deemed “not credible” – i.e., the US banks that are larger, more interconnected since the financial crisis.
- Plan shortcomings cited, in addition to deficiencies.
- Far more public transparency than before.
- Muted market reaction.
- Agencies clearly laid out their areas of analysis.
- Higher expectations going forward.
- Legal entity rationalization is key.
- Shortcomings should not be overlooked.
- Smaller banks on alert.
- Agencies quickly address GAO concerns.