DSNews The homepage of the servicing industry
The verdict is in. On Tuesday, The FDIC and the Federal Reserve Board announced their determination for the revised "living wills" of five financial institutions. Unfortunately for Wells Fargo their plan was rejected for the second time. The agencies stated that because of this shortcoming, Wells Fargo will be subject to restrictions on certain activities until the deficiencies are remedied.
In April of this year, the agencies jointly determined that each of the 2015 resolution plans, or “living wills,” of Bank of America, Bank of New York Mellon, JPMorgan Chase, State Street, and Wells Fargo were not credible or would not facilitate an orderly resolution under the U.S. Bankruptcy Code. As such, the agencies issued joint letters to these firms detailing the deficiencies in their plans and the actions the firms must take to address them, basically saying the banks were required to prove to the government they are not “too big to fail.”
In Wells Fargo’s plan, the institution stated that it believed the three deficiencies were remediated as required by the 2015 Plan Feedback Letter. Wells Fargo also wrote that it continues to invest in and support projects to improve its resolvability and will continue to incorporate resolvability considerations into its decision-making processes.
Specifically, the agencies determined that Wells Fargo fell short in the categories of "legal entity rationalization" and "shared services” but did adequately remedy its deficiency in the "governance" category.
“Wells Fargo is committed to strengthening and enhancing its resolution planning processes, and we will continue to work closely with the agencies to better understand their concerns so that we can bring our resolution planning processes in line with their expectations,” said Wells Fargo in a statement. “While we are disappointed with the determination issued by the agencies, we continue to be dedicated to sound resolution planning and preparedness. We believe we will be able to address the concerns raised today in the March 2017 revised submission.”
The Federal Reserve Board has released subsequent feedback letters issued to the firms, which describes the steps the firms have taken to address the deficiencies outlined in the April 2016 letters.
