Florida Short Sale Update: Banks Will Now Have ‘Living Wills’.
New regulations are now in effect for the largest banks. They are calling this new regulation “living wills”. The largest banks are now required to submit to the government their break up plans so that the government can safely shut them down if they become in danger of collapsing.
This regulation is part of the Dodd- Frank financial reform law. This is to try to keep the issues that happened to the financial systems when Lehman Brothers failed in 2008.
The regulation covers banks that have more than $250 billion in nonbank assets. Their plans must be submitted to the Federal Reserve and the Federal Deposit Insurance Corp.
There are public and confidential parts to the forms that the banks submitted starting about a week ago.
Regulators released the public parts of the “living wills” of:
The submissions reveal what each bank is going to do in the case they get near bankruptcy.