12 Largest Banks of US Forced To Resubmit Their Plans for Navigating a Bankruptcy

Federal banking regulators said in a statement that 12 largest banks of the United States have resubmitted their plans for navigating a bankruptcy that would not require a taxpayer bailout.

This is the third time that banks were forced to resubmit their plans, which clearly details their strategy for a rapid and orderly bankruptcy as required by the Dodd-Frank Wall Street Reform and Consumer Protection Act.

The Federal Reserve Board and the Federal Deposit Insurance Corporation (FDIC) said Monday that they will start review of their new plans as soon as possible.

The government agencies in previous year found that the bank's plans were lacking and were based on unrealistic assumptions. The agencies issued orders saying that the deficiencies should be fixed within time, otherwise the firms could face forced divestiture or higher capital requirements.

Now, as per the new orders, the 12 banks need to submit their plans by July 1. The 12 banks that need to fulfill the criteria include Bank of America Corporation, Barclays, Citigroup Inc., Deutsche Bank AG, Goldman Sachs Group, JPMorgan Chase & Co., Morgan Stanley, UBS and Wells Fargo.

The agencies said, "The government agencies also posted public portions of the banks' so-called living wills. The firms are required to make sections of their plans public, including explaining the firm's material entities and core business lines, to foster more transparency in resolution plans".

Morgan Stanley said in a statement that under its plan, insured depositors will get timely access to their funds and there would be no adverse effects on global and US financial stability.

It was found that a dozen of the largest Wall Street banks on Monday published detailed plans showcasing how they would shut down their business during a crisis situation without even using taxpayer money.