President and CEO of J.P. Morgan Chase Co. Jamie Dimon testifies before a Senate Banking Committee hearing Credit: Mark Wilson/Getty Images
After the big bank bailout of 2008, nothing that drastic was ever supposed to happen again. But just last month, J.P. Morgan Chase CEO Jamie Dimon bet the farm and lost it in a bungled trade – at last count, the total was projected at $9 billion, and the fallout for Chase is yet to be determined.
In the event of emergency, experts urge us all to have a disaster plan – what about banks? In a worst-case scenario, what’s their plan?
Today, nine of the U.S.’ biggest financial institutions – including Chase, Bank of America, Citigroup, Morgan Stanley and Goldman Sachs – are delivering their own personal bailout plans to federal regulators. These so-called “living wills” are a requirement of the Dodd-Frank act, and are designed to avoid another federal bailout, which cost taxpayers $700 billion. In the event of catastrophe – i.e, major failure or bankruptcy — banks are expected to do their own financial untangling, and like the Boy Scouts, they’d better be prepared.
What exactly is covered by these “living wills”? Do they go far enough? How likely is it that they’ll be put to use? If they are – what would that look like?
Heidi Moore, New York Bureau Chief for Marketplace
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