Regulators to Goldman: ‘Living Will’ Falls Short of Dodd-Frank Provision

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Regulators to Goldman: ‘Living Will’ Falls Short of Dodd-Frank Provision

By JUSTIN BAER - Updated April 13, 2016 8:53 a.m. ET

Improvements in the bank’s plan on a potential bankruptcy plan noted, but shortcomings said to remain

Regulators told Goldman Sachs Group Inc. to rewrite its plan detailing how it would go through a potential bankruptcy.

The Federal Deposit Insurance Corp. said Wednesday that it doesn’t think the bank’s so-called living will meets the requirements of the 2010 Dodd-Frank law. The Federal Reserve stopped short of deeming Goldman’s plan “not credible,” but also identified weaknesses that must be addressed.

But because the two regulators didn’t jointly find the plan missed the mark, Goldman won’t face the more stringent requirements, including higher capital requirements and limits on growth and certain activities,that could be imposed on other big banks if they don’t improve their wills later this year. The FDIC and the Fed instead said Goldman must address its plan’s shortcomings in its 2017 submission.

The regulators said Goldman fell short on its process for determining how much liquidity its various units would need to sustain themselves once their parent filed for bankruptcy protection, and that its plan to wind down its portfolio of derivatives “lacked specificity.”...

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