Dec 18, 2019

Six of the biggest U.S. banks have weaknesses in their crisis plans

Illustration: Lazaro Gaimo/Axios Visuals

The Federal Reserve Board and the Federal Deposit Insurance Corporation found shortcomings in the exit strategies — or "living wills" — of six of the eight largest banks in the U.S., it said on Tuesday.

Why it matters: These living wills dictate how big banks handle bankruptcy during financial distress — or a financial crisis. Bank of America and Wells Fargo are among those currently unable to prove that their top decision-makers can confidently act on crisis-level exit strategies.

What the Fed found: The following banks have shortcomings or weaknesses in their ability to reliably produce data needed to execute their living wills in stressed conditions:

  • Bank of America
  • Bank of New York Mellon
  • Citigroup
  • Morgan Stanley
  • State Street
  • Wells Fargo

Yes, but: The Federal Reserve did not find shortcomings in plans from Goldman Sachs and J.P. Morgan Chase. Shortcomings are not as serious as outright "deficiencies," which could result in "more stringent capital and liquidity requirements," the Wall Street Journal reports.

  • "Fed officials have grown increasingly confident that big U.S. banks are safer than they were in 2008, when the financial crisis exposed significant weaknesses in their risk management," per the WSJ.
  • The bank regulators also noted on Tuesday that Morgan Stanley, Bank of America, Wells Fargo, and Goldman Sachs have successfully addressed previous shortcomings outlined in 2017.

What's next: Each of the six banks with shortcomings or weaknesses must submit a plan to address the issues to the Fed and the FDIC by March 31.

Go deeper: Big American banks are doing quite well in 2019

Go deeper

Updated 38 mins ago - Health

World coronavirus updates

Data: The Center for Systems Science and Engineering at Johns Hopkins; Map: Axios Visuals

Over 500 schools in South Korea have either closed or postponed reopening, according to the Korea Times, which cites data from the Ministry of Education.

Why it matters: South Korea has been a model for how to handle the novel coronavirus, and the closures reportedly followed concerns from parents and teachers over child safety. The country's confirmed death toll has plateaued at 269 over the past few days, with few increases, per Johns Hopkins data.

Updated 39 mins ago - Politics & Policy

Coronavirus dashboard

Illustration: Sarah Grillo/Axios

  1. Global: Total confirmed cases as of 4 p.m. ET: 5,877,503— Total deaths: 362,731 — Total recoveries — 2,464,595Map.
  2. U.S.: Total confirmed cases as of 4 p.m. ET: 1,735,971 — Total deaths: 102,286 — Total recoveries: 399,991 — Total tested: 15,646,041Map.
  3. Public health: Hydroxychloroquine prescription fills exploded in March —How the U.S. might distribute a vaccine.
  4. 2020: North Carolina asks RNC if convention will honor Trump's wish for no masks or social distancing.
  5. Supreme Court: Senators Grassley, Leahy urge Supreme Court to continue live streams post-pandemic.
  6. Business: Fed chair Powell says coronavirus is "great increaser" of income inequality.
  7. 🚀 Space: How to virtually watch SpaceX's first crewed launch Saturday.

Trump to end Hong Kong’s special trade status

President Trump. Photo: Win McNamee/Getty Images

President Trump announced on Friday that the U.S. would be fundamentally changing longstanding policies toward Hong Kong as a result of Chinese encroachment on the city's autonomy.

Why it matters: Trump said he would be effectively ending the special trade status that has allowed Hong Kong to flourish as a gateway to the Chinese market. That leaves an uncertain future for businesses that operate in Hong Kong, not to mention the city's 7 million residents, and could be met with reprisals from Beijing.