Five Big Banks Flunk Key Test, Proving They're Still "Too Big To Fail"

[eridani]

http://www.commondreams.org/news/2016/04/13/five-big-banks-flunk-key-test-proving-theyre-still-too-big-fail

Federal regulators Wednesday confirmed what watchdogs have been warning for years—the biggest banks in the United States are still "too big to fail."

The Federal Reserve and the Federal Deposit Insurance Corporation (FDIC) found that five major U.S. banks failed to offer credible strategies for how they would enter bankruptcy in an "orderly fashion," without taking the whole economy down with them. The so-called "living wills" rejected by the banking agencies were submitted by Bank of America Corp., Bank of New York Mellon Corp., JPMorgan Chase & Co., State Street Corp., and Wells Fargo.

"The goal to end too big to fail and protect the American taxpayer by ending bailouts remains just that: only a goal," Thomas Hoenig, vice chairman of the FDIC, said (pdf) in a statement.

As Bloomberg explains:

The living-wills exercise was a key check on the biggest banks written into Dodd-Frank, the regulatory overhaul prompted by the 2008 financial crisis. Lehman Brothers Holdings Inc. demonstrated what could happen when huge, complex financial firms land in bankruptcy court, so this process was designed to make sure big banks in the U.S. are able to be wound down quickly without taking others with them.

The banks have until October 1 to resubmit their plans with serious "deficiencies" corrected, or face "more stringent" regulations, the agencies said.

[CurtEastPoint]

1. Nationalize them all.