Wall Street Journal vs Federal Regulators On Major U.S. Banks Living Wills
Apr 14, 2016 04:17 AM EDT
It is not quite often when news agencies are caught up in controversy for actually reporting a controversial topic. Just yesterday, the Wall Street Journal reported on federal regulators' rejection on several U.S. Banks based on their living wills which were submitted and the story reached the regulators which urged an investigation to kick off earlier today.
Besides investigating on the five major banks, including J.P. Morgan, Wells Fargo, Bank of America, Bank of New York and State Street, the Federal Reserve (Fed) and Federal Deposit Insurance Corporation (FDIC), they are now also investigating on the publication, the Wall Street Journal, according to Reuters.
According to the publication, the Federal Reserve as stated by its spokesperson, Eric Kollig, have taken initial steps in investigating how Wall Street Journal was able to release a story regarding the rejection of regulators towards the living wills of the banks even before the regulators officially give out their determinations.
The matter is seemingly serious, however, the story is still currently in development and the Wall Street Journal has yet to release their statements regarding the investigation. Meanwhile, the story that placed the publication itself in the spotlight was in its most recently released story with the title "Regulators Reject 'Living Wills' of Five Big U.S. Banks," as per the Wall Street Journal.
The publication revealed that the five banks were being rebuked by the Fed and the FDIC asking them to revise their proposed living wills or the financial institutions' plans as they forsee bankruptcy. Of course, such proposals must be legitimate and within the standards of the 2010 Dodd-Frank law, the news agency adds.
However, the news outlet claimed that the regulators, Fed and the FDIC, have made their assessments in each of the five banks. According to the report, Goldman Sachs Group Inc.'s plan unfortunately failed the standards for the FDIC while the Fed assessed otherwise.
Meanwhile, other banks received differing assessments from the two agencies which included Morgan Stanley which received a deficient assessment from the Fed and a more positive one from FDIC. Citigroup Inc. received favorable responses from Fed and FDIC, while the Bank of America received opposing assessments.
FDIC Chairman Martin Gruenberg urged that the agencies "are committed to carrying out the statutory mandate that systemically important financial institutions demonstrate a clear path to an orderly failure under bankruptcy at no cost to taxpayers," Gruenberg said in a statement on Wednesday, as per the news outlet. "Today's action is a significant step toward achieving that goal," Gruenberg added.
There are no further developments as of current.