Joint Release Federal Deposit Insurance Corporation
Federal Reserve Board of Governors
For immediate release December 13, 2016
Agencies Announce Determinations on October Resolution Plan Submissions of Five
Systemically Important Domestic Banking Institutions
The Federal Deposit Insurance Corporation (FDIC) and the Federal Reserve Board on Tuesday
announced that Bank of America, Bank of New York Mellon, JP Morgan Chase, and State Street
adequately remediated deficiencies in their 2015 resolution plans. The agencies also announced
that Wells Fargo did not adequately remedy all of its deficiencies and will be subject to
restrictions on certain activities until the deficiencies are remedied.
Resolution plans, required by the Dodd-Frank Act and commonly known as living wills, must
describe the company's strategy for rapid and orderly resolution under bankruptcy in the event of
material financial distress or failure of the company.
In April 2016, the agencies jointly determined that each of the 2015 resolution plans of the five
institutions was not credible or would not facilitate an orderly resolution under the U.S.
Bankruptcy Code, the statutory standard established in the Dodd-Frank Act. The agencies issued
joint notices of deficiencies to the five firms detailing the deficiencies in their plans and the
actions the firms must take to address them. Each firm was required to remedy its deficiencies by
October 1, 2016, or risk being subject to more stringent prudential requirements or to restrictions
on activities, growth, or operations. The review and the findings announced today relate only to
the joint deficiencies identified in April 2016.
The agencies jointly determined that Wells Fargo did not adequately remedy two of the firm's
three deficiencies, specifically in the categories of "legal entity rationalization" and "shared
services." The agencies also jointly determined that the firm did adequately remedy its
deficiency in the "governance" category. In light of the nature of the deficiencies and the
resolvability risks posed by Wells Fargo's failure to remedy them, the agencies have jointly
determined to impose restrictions on the growth of international and non-bank activities of Wells
Fargo and its subsidiaries. In particular, Wells Fargo is prohibited from establishing international
bank entities or acquiring any non-bank subsidiary.
The firm is expected to file a revised submission addressing the remaining deficiencies by March
31, 2017. If after reviewing the March submission the agencies jointly determine that the
deficiencies have not been adequately remedied, the agencies will limit the size of the firm's non-
bank and broker-dealer assets to levels in place on September 30, 2016. If Wells Fargo has not
adequately remedied the deficiencies within two years, the statute provides that the agencies, in
Federal Reserve Board of Governors
For immediate release December 13, 2016
Agencies Announce Determinations on October Resolution Plan Submissions of Five
Systemically Important Domestic Banking Institutions
The Federal Deposit Insurance Corporation (FDIC) and the Federal Reserve Board on Tuesday
announced that Bank of America, Bank of New York Mellon, JP Morgan Chase, and State Street
adequately remediated deficiencies in their 2015 resolution plans. The agencies also announced
that Wells Fargo did not adequately remedy all of its deficiencies and will be subject to
restrictions on certain activities until the deficiencies are remedied.
Resolution plans, required by the Dodd-Frank Act and commonly known as living wills, must
describe the company's strategy for rapid and orderly resolution under bankruptcy in the event of
material financial distress or failure of the company.
In April 2016, the agencies jointly determined that each of the 2015 resolution plans of the five
institutions was not credible or would not facilitate an orderly resolution under the U.S.
Bankruptcy Code, the statutory standard established in the Dodd-Frank Act. The agencies issued
joint notices of deficiencies to the five firms detailing the deficiencies in their plans and the
actions the firms must take to address them. Each firm was required to remedy its deficiencies by
October 1, 2016, or risk being subject to more stringent prudential requirements or to restrictions
on activities, growth, or operations. The review and the findings announced today relate only to
the joint deficiencies identified in April 2016.
The agencies jointly determined that Wells Fargo did not adequately remedy two of the firm's
three deficiencies, specifically in the categories of "legal entity rationalization" and "shared
services." The agencies also jointly determined that the firm did adequately remedy its
deficiency in the "governance" category. In light of the nature of the deficiencies and the
resolvability risks posed by Wells Fargo's failure to remedy them, the agencies have jointly
determined to impose restrictions on the growth of international and non-bank activities of Wells
Fargo and its subsidiaries. In particular, Wells Fargo is prohibited from establishing international
bank entities or acquiring any non-bank subsidiary.
The firm is expected to file a revised submission addressing the remaining deficiencies by March
31, 2017. If after reviewing the March submission the agencies jointly determine that the
deficiencies have not been adequately remedied, the agencies will limit the size of the firm's non-
bank and broker-dealer assets to levels in place on September 30, 2016. If Wells Fargo has not
adequately remedied the deficiencies within two years, the statute provides that the agencies, in
consultation with the Financial Stability Oversight Council, may jointly require the firm to divest
certain assets or operations to facilitate an orderly resolution of the firm in bankruptcy.
The Federal Reserve Board is releasing the feedback letters issued to each of the five firms. The
letters describe the steps the firms have taken to address the deficiencies outlined in the April
2016 letters. The feedback letter issued to Wells Fargo discusses the steps the firm has taken to
address its deficiencies and those needed to adequately remedy the two remaining deficiencies.
The determinations made by the agencies pertain solely to the 2015 plans and not to the 2017 or
any other future resolution plans. In addition to requiring that the firms address their deficiencies,
in April the agencies also identified institution-specific shortcomings, which are weaknesses
identified by both agencies, but are not considered deficiencies.
The agencies in April also provided guidance to be incorporated into the next full plan
submissions due by July 1, 2017, to the five firms, as well as Goldman Sachs, Morgan Stanley,
and Citigroup, and will review those plans under the statutory standard. If the agencies jointly
decide that the shortcomings or the guidance are not satisfactorily addressed in a firm's 2017
plan, the agencies may determine jointly that the plan is not credible or would not facilitate an
orderly resolution under the U.S. Bankruptcy Code.
The decisions announced today received unanimous support from the FDIC and Federal Reserve
boards.
# # #
Related Link: Resolution Plans
Media Contacts:
Federal Reserve Board Eric Kollig 202-452-2955
FDIC Barbara Hagenbaugh 202-898-6993
FDIC: PR-109-2016
certain assets or operations to facilitate an orderly resolution of the firm in bankruptcy.
The Federal Reserve Board is releasing the feedback letters issued to each of the five firms. The
letters describe the steps the firms have taken to address the deficiencies outlined in the April
2016 letters. The feedback letter issued to Wells Fargo discusses the steps the firm has taken to
address its deficiencies and those needed to adequately remedy the two remaining deficiencies.
The determinations made by the agencies pertain solely to the 2015 plans and not to the 2017 or
any other future resolution plans. In addition to requiring that the firms address their deficiencies,
in April the agencies also identified institution-specific shortcomings, which are weaknesses
identified by both agencies, but are not considered deficiencies.
The agencies in April also provided guidance to be incorporated into the next full plan
submissions due by July 1, 2017, to the five firms, as well as Goldman Sachs, Morgan Stanley,
and Citigroup, and will review those plans under the statutory standard. If the agencies jointly
decide that the shortcomings or the guidance are not satisfactorily addressed in a firm's 2017
plan, the agencies may determine jointly that the plan is not credible or would not facilitate an
orderly resolution under the U.S. Bankruptcy Code.
The decisions announced today received unanimous support from the FDIC and Federal Reserve
boards.
# # #
Related Link: Resolution Plans
Media Contacts:
Federal Reserve Board Eric Kollig 202-452-2955
FDIC Barbara Hagenbaugh 202-898-6993
FDIC: PR-109-2016