Too Big to Fail

Banks Crafting ‘Living Wills’

Plans must be submitted by July 1.

Five of the nation’s largest banks are writing contingency plans to be used if they go under. The plans are one of the requirements of the Dodd-Frank financial-reform law. The “living wills,” which may be up to 4,000 pages long, must be submitted to regulators by July 1. JP Morgan Chase, Bank of America, Citigroup, Goldman Sachs, and Morgan Stanley will all submit their plans to the Federal Reserve and the FDIC. Even the healthiest banks are submitting plans and simplifying their global operations, because the Dodd-Frank law allows regulators to compel a bank to divest subsidiaries if it cannot plan for an orderly resolution in bankruptcy. One expert said, “The resolution process is now going to be part of the cost-benefit analysis on where banks will do business. The complexity of the organizations will shrink.”