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Four of the biggest banks on Wall Street must improve their blueprints for a hypothetical wind-down after top US regulators found weaknesses in their plans.<\/p>\n
The so-called living wills of JPMorgan Chase<\/a> & Co., Bank of America<\/a> Corp., Goldman Sachs<\/a> Group Inc. and Citigroup<\/a> Inc. all had a \u201cshortcoming,\u201d the Federal Reserve and Federal Deposit Insurance Corp. said Friday. The regulators reviewed the most recent resolution plans, which were mandated following the 2008 financial crisis.\u00a0<\/p>\n \u201cFor the four banks with an identified shortcoming, the letters describe the specific weaknesses resulting in the shortcoming and the remedial actions required by the agencies,\u201d the agencies said in a\u00a0joint statement.<\/a>\u00a0The regulators didn\u2019t identify weaknesses in the plans from Bank of New York Mellon<\/a> Corp., Wells Fargo<\/a> & Co., State Street<\/a> Corp. or Morgan Stanley<\/a>.\u00a0<\/p>\n Bank of America, Goldman and JPMorgan declined to comment.<\/p>\n Citi said it was \u201cfully committed to addressing the issues identified by our regulators.\u201d The lender \u201cwill invest what is necessary to support this critical effort,\u201d and is confident it could be resolved without taxpayer funds or negatively effecting the financial system, Citi said in a statement.\u00a0<\/p>\n The Fed and FDIC diverged on the significance of the problems with Citi\u2019s plan. The FDIC deemed the weakness to constitute a \u201cdeficiency,\u201d a more severe finding. Because the two disagreed, Citi\u2019s weakness was deemed a \u201cshortcoming.\u201d<\/p>\n The finding of a shortcoming doesn\u2019t result in a penalty for banks. The regulators found issues with how each of the four banks\u2019 plans dealt with derivatives.<\/p>\n According to the regulators, Citi\u2019s plan could not add in \u201cupdated stress scenarios and assumptions.\u201d They also said issues with data reliability contributed to inaccurate calculations regarding how much capital would required for executing the plan. Meanwhile, JPMorgan\u2019s strategy couldn\u2019t update some economic conditions in calculating the necessary capital and liquidity to carry out its plan, regulators said.<\/p>\n Bank of America\u2019s living will plan wouldn\u2019t work for some derivatives transactions, the agencies said, calling into question the firm\u2019s ability to execute it. Goldman\u2019s wind-down plan was found not to fully capture the complexity of its derivatives portfolio.\u00a0<\/p>\n The regulators made their determinations based on plans submitted in 2023. The banks with weaknesses are required to deal with them in new resolution plans due July 1, 2025, according to the regulators.\u00a0<\/p>\n<\/div>\nSubscribe to the Fortune Next to Lead newsletter to get weekly strategies on how to make it to the corner office. Sign up for free<\/a> before it launches on June 24, 2024.<\/div>\n<\/div>\n