by Tim Wallace
Telegraph.co.uk
Five of the big eight US banks have failed to come up with a solid plan to explain how they could be safely wound down or broken into chunks in the event that they collapse in a future financial crisis or recession.
The so-called “living wills” are a crucial part of the plan to make sure a bank’s collapse does not wreck the financial system and the wider economy.
If living wills are put in place before any future calamity, regulators hope the banks will no longer be too big to fail and so a collapse would not result in either the devastation which followed the Lehman Brothers collapse, or another taxpayer bailout.