So-called living wills submitted by big banks are "not credible" and have to be revised by next July, federal regulators said on Tuesday.
The Dodd-Frank financial reforms require certain big banks to submit plans detailing how they would wind themselves down in the event of a crisis. The 11 institutions subject to the rule submitted first-round plans in 2012 and revisions in 2013.
The Federal Deposit Insurance Corp. said each bank had specific shortcomings, and that all banks had a few in common—among them unrealistic assumptions and a failure to identify necessary changes in their structures.
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Based on its review, the FDIC said "the plans submitted by the first-wave filers are not credible and do not facilitate an orderly resolution under the U.S. Bankruptcy Code."
The regulator gave the banks til July 1, 2015 to file plans that "demonstrate that the firms are making significant progress to address all the shortcomings identified in the letters," among other requirements.
It will also require the banks to take actions that will make them easier to wind down in the event of a crisis, including simplifying their legal structure.
The 11 firms in question are Bank of America, Bank of New York Mellon, Barclays, Citigroup, Credit Suisse, Deutsche Bank, Goldman Sachs, JPMorgan Chase, Morgan Stanley, State Street and UBS.