Lalita Clozel

The bad grades and detailed laundry list of fixes that institutions must make in the next five months — or face possibly severe consequences — may actually prove helpful in the long run, both to the debate over "too big to fail" and the banks themselves. Here's why.

In declaring that five U.S. banks' resolution plans were "noncredible," regulators provided new details on exactly what each institution did wrong, as well as what Citi and others did right. Here's what they said.

Regulators struck down the living wills of five of the eight megabanks under evaluation, including JPMorgan Chase, Bank of America and Wells Fargo, requiring them to submit fixes to their resolution plans by Oct. 1 or face more stringent regulatory requirements.

WASHINGTON — The Office of the Comptroller of the Currency released Tuesday its first risk appetite statement — a set of general guidelines on what level of risk the agency finds acceptable in various domains.

Regulators have yet to provide feedback on last year's living-will resolution plans, but for foreign banks with significant operations in the U.S., those assessments are too late. Such institutions are required to put in place an entirely different business model by July of this year.

A former Federal Deposit Insurance Corp. employee took off with data on some 44,000 customers of closed banks when she left the agency in late February, according to an agency memo uncovered by The Washington Post.

The agency plans to reduce the period of heightened regulatory scrutiny to which de novo institutions are subjected to three years, down from the seven-year period established in the wake of the financial crisis.

In an interview, FDIC Chairman Martin Gruenberg said the agency will work with banking groups, state commissioners and others to help foster the growth of new banking charters.

The U.S. Supreme Court's decision last week not to review a mortgage-backed securities lawsuit renewed interest in a long-brewing legal conflict over the mandate of the Financial Institutions Reform, Recovery, and Enforcement Act.

An 11-page paper by the agency signaled its intent to take a higher-profile role in ensuring that regulators are not inappropriately hampering banks' adoption of new technologies to reach customers, while also keeping an eye out that institutions are able to handle the risks involved.