US regulators identify weaknesses in bankruptcy plans of 4 major banks

(MENAFN) On Friday, the Federal Deposit Insurance Corporation (FDIC) and the Federal Reserve disclosed their findings on weaknesses in the bankruptcy plans submitted by four major U.S. banks. The joint review by these regulators examined submissions from eight of the largest and most complex banks in the United States, revealing flaws in the plans of Bank of America, Citigroup, Goldman Sachs and JPMorgan Chase for year 2023.

According to a press release from the agencies, each weakness identified in the plans of these four banks constitutes a “gap”, reflecting concerns about the feasibility of the plans. The FDIC and Federal Reserve emphasized that they have provided detailed comments to the eight banks, highlighting areas where further development of their resolution strategies and capabilities is needed.

Specifically, feedback to banks with identified deficiencies delineates the weaknesses contributing to those deficiencies and specifies corrective actions mandated by regulatory agencies. The aim is to comprehensively address these deficiencies in the banks' next resolution plans, expected by July 1, 2025.

The regulatory review highlights the critical importance of robust bankruptcy plans to ensure the stability and resilience of large financial institutions, particularly during times of economic stress or potential financial distress. Going forward, banks will need to diligently address identified weaknesses and improve their contingency strategies to meet regulatory expectations and strengthen their preparedness to effectively address potential financial challenges.

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