And it is about time!
After Wall Street has spent years trying to convince regulators that they could collapse without disrupting the financial system, the largest U.S. banks will soon have to take the additional step of showing how they can keep from failing in the first place.
The Office of the Comptroller of the Currency, which is responsible for maintaining the safety and soundness of national banks, is planning to propose a requirement that lenders with more than $50 billion in assets to provide blueprints for how they’ll withstand a crisis and maintain their businesses. It’s a big undertaking for bank compliance staffs and the first time many of the largest regional firms would have to submit formal survival strategies.
“Effective planning is critical to the resiliency of banks’ core business lines and critical operations,” OCC Chief Thomas Curry said in a statement. The initiative will lay out enforceable guidelines for recovery planning that lets a bank keep its doors open under severe stress, he said.