SAN FRANCISCO (CBS SF) — San Francisco-based Wells Fargo Bank and four other large U.S. banks have failed to convince regulators that they could survive another economic collapse.
U.S. regulators announced last week that Wells Fargo, Bank of America, JPMorgan Chase, State Bank and Bank of New York Mellon are still too big to fail.READ MORE: CA Lawmakers Vote To Legalize Rolling Stops For Cyclists; Bill Awaits Governor's Signature
The Federal Reserve Board and the Federal Deposit Insurance Corporation announced their findings regarding the “eight systemically important, domestic banking institutions,” and noted that these five banks were “not credible or would not facilitate an orderly resolution under the U.S. Bankruptcy Code.”
Wells Fargo was among the eight large U.S. banks to receive the Treasury Department’s initial round of capital investments, or bailouts. In 2008, U.S. taxpayers forked over $25 billion to bail out Wells Fargo. The bank returned the $25 billion roughly one year later.
On Wednesday, Wells Fargo issued a statement regarding the regulators’ response to the bank’s plan, should they need to file for bankruptcy, which is required under the “living will” process of the Dodd-Frank Wall Street Reform and Consumer Protection Act:
“We were disappointed to learn that our 2015 resolution plan submission was determined to have deficiencies in certain areas. The Federal Reserve Board and the FDIC acknowledged the continued steps Wells Fargo has taken in enhancing its resolution plan and we view the feedback as constructive and valuable to our resolution planning process. We understand the importance of these findings and we will address them as we update our plan by the October 1, 2016 deadline identified by the agencies. We remain dedicated to sound resolution planning and preparedness.”
A Wells Fargo spokeswoman Monday declined to provide further comment to CBS San Francisco on the Federal Reserve’s ruling or how Wells Fargo plans to resolve the deficiencies.READ MORE: Lafayette City Council to Discuss Traffic Safety With School Officials, Public After Deadly Accident
The regulators’ letter to Wells Fargo chairman and CEO John Stumpf explained their findings and notes that Wells Fargo’s submission contained “material errors.”
The regulators stated that those errors caused them to question whether the plan would be executable and the regulators expressed that their plan “raises concerns regarding quality control, senior management oversight, and recovery and resolution planning staff,” as well as “the extent to which there was appropriate internal review and coordination” prior to submission.
A letter from the regulators to JPMorgan Chase went even further, stating that JPMorgan Chase’s current plan to respond to bankruptcy, could “pose serious adverse effects to the financial stability of the United States,” if deficiencies were not adequately addressed.
While those five banks received failing grades from both regulators, Citigroup received a passing grade from both agencies. Goldman Sachs and Morgan Stanley each received a passing grade from only one of the two agencies.MORE NEWS: Santa Rosa Lawmaker Proposes Plan For City-Sanctioned Sideshows
By Hannah Albarazi – Follow her on Twitter: @hannahalbarazi.