JPMorgan, Wells Fargo Clear Living Will Review by Fed, FDIC

The Federal Reserve and the Federal Deposit Insurance Corporation (FDIC) have approved the 2025 living wills of several major U.S. banks, including JPMorgan Chase (JPM), Wells Fargo (WFC), Bank of America (BAC), Goldman Sachs (GS), and Citigroup (C). This regulatory milestone eases concerns over the banks' resolution plans and signals improved preparedness for potential failure.

Details of the Action

Living wills are mandatory resolution plans that large banks must submit to regulators, detailing how they would wind down operations in an orderly manner without requiring a government bailout. The Fed and FDIC reviewed the 2025 submissions and determined they meet regulatory standards, removing a key hurdle that had previously led to rejections for some institutions.

Bank Responses

Banks welcomed the approval. A JPMorgan spokesperson stated the bank is "committed to maintaining robust and effective resolution plans." Wells Fargo noted the approval reflects "years of work and investment in improving resolvability."

Precedents and Context

Since the 2008 financial crisis, regulators have pushed banks to ensure they can fail without taxpayer bailouts. In prior years, some banks' plans were rejected, forcing revisions. The current approvals follow significant improvements in the banks' resolution strategies.

Potential Financial Impact

Removing this regulatory uncertainty could lower compliance costs and boost investor confidence, potentially supporting bank stock prices. However, banks remain required to update their plans annually and submit them for review.