WASHINGTON — A lack of liquidity wasn't what caused most of the largest U.S. banks to fail their living wills test, a Federal Deposit Insurance Corp. official said Thursday.

Instead, regulators wanted the banks to show a credible methodology for taking themselves apart.

"It wasn't about adequacy of the liquidity," Brent Hoyer, a deputy director in charge of risk management supervision at the FDIC, said during a panel discussion here. "The answer could be, reduce your friction."

The FDIC and Federal Reserve announced in April that out of the eight global systemically important banks, only one — Citigroup — had filed a bankruptcy plan acceptable to both agencies.

Public documents detailing the banks' deficiencies unveiled new ways to measure a bank's liquidity capacity in resolution, called Resolution Adequacy and Positioning and Resolution Liquidity Execution Need.

But several other issues were raised by regulators, including the complexity of the financial institutions and the governance processes put in place to ensure that resolution is triggered in time.

"All of the obstacles are fundamental, and all the obstacles they have to overcome," Hoyer said.

He added, however, that for firms that elected the single-point-of-entry strategy — where a holding company files for bankruptcy while the core lines of businesses are allowed to keep running — funding was essential to the plan.

Hoyer and other regulators speaking on the panel — including officials from the Federal Reserve and Treasury Department — affirmed that despite the low rate of passage on their living wills, large banks were in much better shape than before the financial crisis.

"The headlines will read that one firm had a passing grade, and that's a little deceiving in my opinion," said Anjan Mukherjee, deputy assistant secretary for financial institutions at the Treasury. "There's been tremendous progress."

But even if they were deemed credible, Hoyer said regulators would not consider revising capital requirements and other standards imposed on systemically important banks.

"Absolutely not," said Hoyer. "Can we say with certainty" that a credible plan "provides for resolvability that it is 100%? The answer is no."

Because of the inherent uncertainty in resolution planning, additional safety measures are required, according to Hoyer. "This is about reducing uncertainty at the nearest level possible."

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