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5 Big Banks Fail U.S. Regulators’ Test

Would still need public money to avert another crisis.

More than half of America’s biggest banks don’t have legitimate “living will” plans in the event of a crisis, federal regulators said Wednesday. Five out of eight top banks failed a test designed to track how successfully they would wind down operations without public money in the event of a financial emergency, including Bank of America, J.P. Morgan Chase, and Wells Fargo. The emergency plans are required as part of the new Dodd-Frank financial overhaul legislation, after the federal government agreed to spend billions of dollars in bailouts to keep those same banks from pulling down the U.S. economy during the 2007-2008 financial meltdown. “Today’s action is a significant step toward achieving that goal,” FDIC Chairman Martin Gruenberg said in a statement. “The FDIC and Federal Reserve are committed to carrying out the statutory mandate that systemically important financial institutions demonstrate a clear path to an orderly failure under bankruptcy at no cost to taxpayers.”