The Office of the Comptroller of the Currency plans to require nationally chartered banks with more than $50 billion in assets to create plans detailing how they would recover from severe financial stress. Banks already must pass annual stress tests and submit "living will" bankruptcy plans.
The Federal Reserve and the Federal Deposit Insurance Corp. have told Wells Fargo that, with some revisions, they can accept the bank's "living will" plan for wind-down in case of bankruptcy. Wells Fargo's living will details step-by-step plans to sell off units and put other units in bankruptcy as needed.
Regulators have released a template aimed at helping banks with at least $50 billion in assets, but less than $100 billion, write an initial "living will" by Dec. 31. More than 130 banks are affected, including U.S. Bancorp and SunTrust Banks. The Federal Reserve and the Federal Deposit Insurance Corp. issued the 27-page template, which banks are not required to use.
The legality of President Barack Obama's 2012 recess appointment of Richard Cordray to lead the Consumer Financial Protection Bureau is in question after the U.S. Court of Appeals ruled that similar appointments to the National Labor Relations Board were not proper.
Sheila Bair, chairwoman of the U.S. Federal Deposit Insurance Corp., said that for major financial institutions to comply with the new "living will" requirements, they might need significant structural changes. Under the Dodd-Frank Act, significantly important financial institutions must disclose a plan for orderly liquidation in an imminent collapse. Bair also suggested that banks might be able to use contingent-capital bonds in bonus payouts.