Regulators released public portions of resolution plans for eight of the largest banks Wednesday while also announcing a one-year extension for American International Group and Prudential to file their next plans.
The eights banks had to file the latest round of livings wills, as required by the Dodd-Frank Act, to the Federal Deposit Insurance Corp. and Federal Reserve Board by July 1.
Although the public versions are just a fraction of what the regulators see, they may provide a window into how firms are approaching the process. The plan submitted by Wells Fargo may get particular attention. Regulators finally announced in April they were satisfied with Wells' changes to its 2015 plan, but the bank's living will had repeatedly disappointed the agencies last year.
Meanwhile, the FDIC and Fed said the deadline for AIG and Prudential was pushed back to Dec. 31, 2018, to "allow the firms time to incorporate any guidance from the agencies into their next resolution plans."
Jaret Seiberg, an analyst at Cowen Group, said in a note after the announcement that the extension is a sign the two companies might soon shed their "systemically important" designation.
"We believe this delay is relevant," Seiberg said. "It is the strongest indication to date that the Federal Reserve and FDIC believe there is at least a chance that [the Financial Stability Oversight Council] de-designates the insurers."
In April 2016, regulators jointly found that five out of the eight banks had not developed credible plans for resolving a failure: JPMorgan Chase, Bank of America, BNY Mellon, State Street and Wells. The FDIC and Fed did not come to an agreement on Goldman Sachs and Morgan Stanley. Only the plan submitted by Citigroup satisfied both regulators.
The failing banks were given another shot at appeasing regulators; they were given until October to improve their 2015 living wills instead of refiling new plans by July 2016.
By December, only Wells Fargo’s updated living will did not pass muster for the Fed and FDIC. They asked the bank to further explain how it planned to simplify its structure and keep critical services running during a failure.