Living Wills From AIG, Prudential Need More Detail, Agencies Say

Three major nonbank financial firms need to provide more detail on how they could be unwound in bankruptcy after a collapse, regulators said Tuesday in their first response to the companies’ living wills.

The statement by the Federal Reserve and Federal Deposit Insurance Corp. marks the first significant feedback to plans submitted by American International Group Inc., Prudential Financial Inc. and General Electric Corp.’s financial unit, which are required to submit plans as systemically important financial institutions.

The regulators found their plans to be short on information about how they are being made more resolvable in a failure, though the criticism was more muted than last year’s strongly worded rejection of plans filed by Wall Street banks.

The Fed and FDIC said the companies need more robust public sections of their living wills. The agencies also said their private responses were tailored to each company, and the one to GE acknowledged that it’s been shrinking its GE Capital Corp. to escape this kind of too-big-to-fail scrutiny.

Non-banks deemed systemically important by the members of the Financial Stability Oversight Council are required under the Dodd-Frank Act to file plans each year, with the most recent addition, MetLife Inc., having to file by the end of 2016. The New York-based insurer is challenging the FSOC designation in federal court.

The largest banks, including JPMorgan Chase & Co. and Citigroup Inc., have already filed several wind-down plans. They’re now awaiting a response from the most recent round posted this month, hoping those plans satisfy the long list of complaints the regulators described in the universal rejections that the biggest 11 firms received in 2014.

The Fed and FDIC on Tuesday also detailed guidelines for 119 smaller banks that must file updated living wills by December.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE