BK Bank of New York Mellon Corporation

By Donna Borak 

WASHINGTON -- U.S. regulators on Tuesday made public new plans submitted by five of the biggest U.S. banks explaining how they could wind down their operations in a period of extreme distress without requiring a taxpayer bailout.

The government required the plans, called "living wills," to be submitted after declaring in April that earlier versions from the institutions weren't sufficiently credible. The five banks are J.P. Morgan Chase & Co., Wells Fargo & Co., Bank of America Corp., Bank of New York Mellon Corp., and State Street Corp.

In releasing the documents, the Federal Reserve and the Federal Deposit Insurance Corp. said in a joint press release that they had no assessment yet of the documents and hadn't yet reviewed them. They said they "will now be initiating their process for review."

The documents that were made public -- about 50 pages each -- were just a small portion of the full filings made by the institutions. Much-longer private documents containing detailed confidential information were also submitted to the agencies.

The regulators also released documents submitted by three other banks, whose plans cleared the regulatory assessment in April, but which submitted updates on their blueprints: Goldman Sachs Group Inc., Morgan Stanley and Citigroup Inc.

The living-will submissions are part of the extensive list of new requirements imposed on big banks after the financial crisis, when the government bailed out the country's largest banks, aiming to prevent an even deeper collapse, but stoking a widespread political backlash.

As part of the 2010 Dodd-Frank financial-overhaul law, big banks are required to submit detailed plans convincing the Fed and FDIC they have credible plans for failing without costing taxpayers a dime.

If the regulators feel that the plans aren't sufficient, they have the power to order the banks to increase their capital cushions to guard against further losses, and, eventually, to order an extensive restructuring of their operations, including shedding certain business lines.

In its 58-page public document, J.P. Morgan Chase said it put together "a robust legal analysis of potential creditor and fiduciary challenges to capital and liquidity support." Based on that analysis, the bank decided to "immediately establish, and begin transferring assets into, an intermediate holding company."

As part of the planning, the financial institutions group in J.P. Morgan's investment bank conducted an "expert analysis" to objectively identify and analyze possible "objects of sale." It found 16 along with potential buyers for each. It has a divestiture playbook for each of those possible sales.

--Emily Glazer contributed to this article.

Write to Donna Borak at donna.borak@wsj.com

(END) Dow Jones Newswires

October 04, 2016 16:48 ET (20:48 GMT)

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