WASHINGTON, Aug 5 (Reuters) - U.S. regulators on Tuesday told banks to come up with better plans to avoid taxpayer bailouts during a future crisis, inching a step closer to taking action if they still found the so-called living wills deficient next year.
The plans submitted by the banks last year showed important shortcomings, the Federal Reserve and Federal Deposit Insurance Corp. said, telling them to demonstrate in 2015 that they had made “significant progress” to address a range of issues.
“The plans submitted by the first-wave filers are not credible and do not facilitate an orderly resolution under the U.S. Bankruptcy Code,” the FDIC said in a statement.
A group of 11 banks have sent in living wills for the third time this year, laying out how they would enter bankruptcy if the next crisis hit without causing the market mayhem that triggered costly government bail-outs in 2008.
The regulators’ comments released on Tuesday refer to the second round of submissions but do not take into account the most recent version of the plans. (Reporting by Douwe Miedema and Emily Stephenson; Editing by Sandra Maler)