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Bank of Ireland has proved that by sending out letters to all its mortgage holders, including those with tracker rates, telling them about fixed rates.
The bank is chancing its arm. You would be crackers to give up a tracker. Yet the bank admitted the letter went to those on such mortgages.
Our banks prove yet again that they are run by chancers - Independent.ie
Banks labelled "too big to fail" must have a so called "living will" that would allow them to close down without the help of public money. Bank of America, Bank of New York Mellon, JPMorgan Chase, State Street and Wells Fargo have until 1 October to submit improved plans.
JP Morgan said it was "disappointed with the conclusion". "The most important thing is that we work with our regulators to understand their feedback in more detail. And we are fully committed to meeting their expectations," said JP Morgan's chief financial officer Marianne Lake.
The Federal Deposit Insurance Corporation (FDIC) and the Federal Reserve board jointly rejected the banks' plans. If they fail to come up with improved plans they could face "more stringent" requirements. The FDIC said that Goldman Sach's plan "was not credible", while the Federal Reserve came to the same conclusion about Morgan Stanley's plans.
Regulators criticised
Regulators have been criticised for not providing enough information on how the plans have been judged. On Tuesday, the Government Oversight Committee (GAO), a bi-partisan group, said financial regulators were not providing banks with enough information about how the plans were reviewed. "Without greater disclosure, companies lack information they could use to assess and enhance their plans," the GAO report said. The GAO recommended that "the FDIC and the Federal Reserve publicly disclose information about their assessment frameworks".
US regulators reject crisis plans of biggest banks - BBC News
The move officially starts a long regulatory chain that could end with breaking up the banks. Nearly a decade after the financial crisis, it underscored how the debate about banks being "too big to fail" continues to rage in Washington and exasperate on Wall Street. The banks failed for reasons ranging from the way liquidity would be housed and shuffled among domestic and foreign subsidiaries to the manner in which executives would communicate problems as they arose during a crisis.
Wednesday's announcement was the first time the two major banking regulators, the Federal Reserve and the Federal Deposit Insurance Corporation, issued joint determinations flunking banks' plans, commonly called "living wills." If the five, which also included Bank of America Corp (BAC.N), State Street Corp (STT.N) and Bank of New York Mellon Corp. (BK.N), do not correct serious "deficiencies" in their plans by October, they could face stricter regulations, like higher capital requirements or limits on business activities, regulators said.
The Bank of America logo is seen at their offices at Canary Wharf financial district in London
Accomplishing that task may not be easy: criticized banks have five months to reassess and rewrite wide swaths of their resolution plans to regulators' satisfaction. At the same time, compliance departments will also be focused on regulatory stress tests, whose results will be released before October. If the deficiencies persist for two years, then the banks will have to divest their assets. They have until July 2017 to address more minor "shortcomings." The regulators' report coincided with the start of banks' earnings reporting period and bank shares rallied. Shares of JP Morgan, Citigroup and Bank of America all closed up more than 3 percent and Wells Fargo shares were up 2.87 percent.
The requirement for a living will was part of the Dodd-Frank Wall Street reform legislation passed in the wake of the 2007-2009 financial crisis, when the U.S. government spent billions of dollars on bailouts to keep big banks from failing and wrecking the U.S. economy. The plans are separate from the Fed's stress tests, where banks demonstrate stability by showing how they would withstand economic shocks in hypothetical scenarios. "The FDIC and Federal Reserve are committed to carrying out the statutory mandate that systemically important financial institutions demonstrate a clear path to an orderly failure under bankruptcy at no cost to taxpayers," FDIC Chairman Martin Gruenberg said in a statement. "Today's action is a significant step toward achieving that goal."
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