Big Banks Craft ‘Living Wills’ In Case They Fail

Reuters
June 27, 2012

Five of the biggest banks in the United States are putting finishing touches on plans for going out of business as part of government-mandated contingency planning that could push them to untangle their complex operations.

Since the law allows regulators to go so far as to order a bank to divest subsidiaries if it cannot plan an orderly resolution in bankruptcy, the deadline is pushing even healthy institutions to start a multi-year process to untangle their complex global operations, according to industry consultants.

The plans, known as living wills, are due to regulators no later than July 1 under provisions of the Dodd-Frank financial reform law designed to end too-big-to-fail bailouts by the government. The living wills could be as long as 4,000 pages.

“The resolution process is now going to be part of the cost-benefit analysis on where banks will do business,” said Dan Ryan, leader of the financial services regulatory practice at PricewaterhouseCoopers in New York. “The complexity of the organizations will shrink.”

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This article was posted: Wednesday, June 27, 2012 at 2:19 am

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