- The Federal Reserve and the FDIC say the bankruptcy plans submitted by 11 of the largest banks make "unrealistic or inadequately supported" assumptions and "fail to make, or even to identify, the kinds of changes in firm structure and practices that would be necessary to enhance the prospects for" an orderly failure. Ouch!
- Full feedback
- The 11 dinged: BAC, BK, C, GS, JPM, MS, STT, and the U.S. units of BCS, CS, DB, and UBS.
- To review: Dodd-Frank requires banks annually submit a "living will" detailing their operations and exposures and how they could be dismantled without the need of a bailout in the event they near failure. Pleasing the regulators is a must as they have the power to force tougher capital rules or restrictions on growth, or even mandate a breakup of the lenders. As for the current failures, the banks have about a year to address D.C.'s concerns.
- "Despite the thousands of pages of material these firms submitted, the plans provide no credible or clear path through bankruptcy that doesn't require unrealistic assumptions and direct or indirect public support," says the FDIC's #2 official, Thomas Hoenig.
- ETFs: XLF, FAS, FAZ, UYG, VFH, IYF, SEF, IYG, FXO, FNCL, FINU, RWW, RYF, FINZ
at CNBC.com (Nov 19, 2014)