Regulators Want Big Banks to Improve Their Living Wills

The Fed and FDIC reviewed the most recent resolution plans, also called living wills. They were mandated following the 2008 financial crisis. The regulators didn't identify specific weaknesses in the plans. Bloomberg's Todd Gillespie joins me now. And it's interesting you cover all these banks with Citigroup in particular, very closely. What's the difference between the likes of JP Morgan, Bank of America, Goldman, how they're being treated in these plans relative to Citigroup right now? Exactly. Shenani and Citigroup right here today. The FDIC has said Citigroup has a deficiency in its plan. So that's one rank lower essentially than what they've identified with the other slightly problematic banks. On the other hand, the Fed has said they only identify a shortcoming with Citigroup. And because the two regulators don't really agree that Citigroup is deficient, they kind of escape the lowest penalty, the sort of worst penalty for these banks right now. But as you say, you know, Citigroup is a bank that has had a lot of regulatory overhang. It's got sent orders. It's got issues with its technology and its data that it's been trying to improve for years. That's been a very costly weight on the bank. And, you know, earlier this week, when the Wall Street Journal first started reporting inklings of this ruling coming, it really did over shadow one of one of Citigroup's biggest initiatives this week, which was its services Invest today as you were there as well. And that, you know, that's really just a reminder to investors that just as Citigroup is trying to really push its transformation plan, there are still a lot of weights hanging over the bank. This might be a fairly basic question, though I find it a fairly difficult question to answer for myself. Todd, why is it that more than a decade after the financial crisis, you have banks still deficient in living wills? Yeah, it's a, it's a great question of Shonali and, and, and these regulators don't break out exactly what the, what the shortcomings are. And you know, obviously, as, as you know, as we move on from the financial crisis, as these banks are evolving themselves, they're constantly having to adapt these plans to the current environment. You know, managing different new types of exposures that people are worried about, whether that's, you know, CRE risk, whether that's different models of, you know, how they're exposed internationally. You know, these banks are constantly having to change. And every year and, you know, every year they're having to think about new issues that keep cropping up. And it's really a sign that some of these banks need to be better at adapting to these newer environments as well and be a bit fresher and a bit faster on their toes.