Financial regulatory consultant Mayra Rodriguez Valladares looks at the recent Federal Reserve/FDIC rejection of the major banks’ resolution plans.

The Federal Reserve Board, and especially the Federal Deposit Insurance Corp., have demonstrated exemplary leadership in their rebuke of big banks’ so-called living wills.
The agencies announced earlier this month that the resolution plans of the country’s 11 largest banks were inadequate, concluding that they could not be unwound in an orderly manner without a government bailout.

While many interpreted this as bad news, the good news is that these two bank regulators have taken very seriously their responsibility under the Dodd-Frank Act to protect taxpayers from having to rescue badly managed banks. It is also good news that these bank regulators are putting large, systemically important banks on very public notice that they must take much more seriously their resolution plans.

Read the entire commentary  at American Banker 

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