Amid the fallout of 2008, when the nation’s banking giants toppled and our economy was sent reeling, Federal legislators and regulators decided that changes were needed. Most of these changes took shape as the Dodd-Frank Act, which provide the framework for much of our current banking regulation and oversight.
You’re probably familiar with Dodd-Frank, at least in part. It’s been a near constant topic of discussion on both Wall Street and Capitol Hill since it took effect. And this conversation has only increased during the Trump Administration.
However, did you know that part of Dodd-Frank requires banks to submit a financial doomsday plan outlining how they will dissolve in the event of a catastrophic collapse?
Essentially, they are “living wills” that show what and how assets would be liquidated in a bankruptcy. The big catch is, these plans cannot rely on taxpayer bailouts. Banks must submit practical, realistic plans that leave no room for optimism.
So who’s checking this financial doomsday plan?
And its not just a an informal thing that banks submit as a symbolic gesture. These plans play a significant role in a bank’s continued operational existence. Dodd-Frank allows regulators to take extensive measures to make sure that a bank’s dissolution plan is credible.
Which banks were required to submit a financial doomsday plan this year?
Most of the nations top big banks were required to submit plans, including:
- Bank of America
- Bank of New York Mellon
- Goldman Sachs
- JP Morgan
- Morgan Stanley
- State Street Corp
- Wells Fargo
American Insurance Group and Prudential Financial were given one-year extensions to submit a workable plan.
You can read each bank’s financial doomsday plan on the Fed’s website. For more legal and financial news, check out our blog. Contact our investment-loss recovery attorneys if you believe you have been the victim of stock fraud or broker misconduct.