WASHINGTON — Top Federal Reserve officials threw their support Tuesday behind "living wills" to be drawn up by large, complex financial companies but said the idea needs improving upon.
Speaking to the Institute of International Bankers, Fed Gov. Daniel Tarullo pointed out "notable limitations" in the idea of a basic living will. "It is very difficult to predict in advance of a crisis which parts of the firm will be under greatest stress, which geographical regions will be affected most severely," he said. "Furthermore, governments may be understandably reluctant to rely too much on a wind-down plan developed by an internationally active financial firm that so mismanaged itself that it is on the brink of failure, placing other institutions [in] peril."