US regulator rejects banks' failure contingency plans, calls them "unrealistic"
Published on Aug 6, 2014 6:04 AM
NEW YORK (AFP) - US regulators warned Tuesday that 11 giant banks have submitted unrealistic contingency plans in the event of bankruptcy, warning that unprepared lenders could plunge the world into a new financial crisis.
The Federal Reserve and Federal Deposit Insurance Corporation said the 11 titans, popularly known as "those too big to fail," must make better plans to restructure their firms in the event of failure.
FDIC Vice Chairman Thomas Hoenig said they had failed to show "how, in failure, any one of these firms could overcome obstacles to entering bankruptcy without precipitating a financial crisis." "The plans provide no credible or clear path through bankruptcy that doesn't require unrealistic assumptions and direct or indirect public support," Hoening warned.
The group comprises JPMorgan Chase, Goldman Sachs, Deutsche Bank, Bank of America, Bank of New York Mellon, Barclays, Citigroup, Credit Suisse, Morgan Stanley, State Street and UBS.
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