Living Will Plans for Citigroup, Chase, Goldman Sachs, & BoA Inadequate: Regulators

The living will plans for Citigroup, JPMorgan Chase, Bank of America, and Goldman Sachs are inadequate, according to the regulators who hit the banking giants with fines.

CNBC is reporting that both the Federal Reserve and the Federal Deposit Insurance Corporation (FDIC) found that the living wills — which are the “unwinding” plans for the banks in the event of distress or failure — were filed in 2023 and didn’t have enough detail on the ways the banks planned to unwind their derivative portfolios tied to the stock market.

“An assessment of the covered company’s capability to unwind its derivatives portfolio under conditions that differ from those specified in the 2023 plan revealed that the firm’s capabilities have material limitations,” the regulators said in a statement about Citigroup.

Chase, Goldman Sachs, and Bank of America all had problems, according to the regulators, but Citigroup had the most serious “deficiencies.” And while Chase, Goldman Sachs, and Bank of America declined to comment about the matter, Citigroup vowed to resolve the matter immediately.

“We are fully committed to addressing the issues identified by our regulators,” the company said in a statement to CNBC. “While we’ve made substantial progress on our transformation, we’ve acknowledged that we have had to accelerate our work in certain areas. More broadly, we continue to have confidence that Citi could be resolved without an adverse systemic impact or the need for taxpayer funds.”

The issues with the living wills aren’t the only ones faced by Citigroup.

Late last month, the banking giant was fined $79 million by British regulators for a $189 billion fat-finger error.

A few separate entities levied the fine. The Financial Conduct Authority (FCA) fined the banking behemoth $36 million, while the Prudential Regulation Authority of the Bank of England charged them $43 million.

The corporation consented to a settlement that was 30% less than the original amount despite having to pay $112 million in fines at first.

“We are pleased to resolve this matter from more than two years ago, which arose from an individual error that was identified and corrected within minutes,” a Citigroup spokesperson said in a statement. “We immediately took steps to strengthen our systems and controls, and remain committed to ensuring full regulatory compliance.”