Big banks write their living wills
By Joseph Lawler

Large banks are gearing up for a major test July 1 that could reshape the U.S. banking system. Eleven of the biggest U.S. banks and branches of foreign banks are required to submit “living wills” to regulators by July. The wills are plans that spell out in advance how exactly the companies would safely go through the bankruptcy process in a failure without the uncertainty and panic of the 2008 crisis. The wills are submitted annually, but this year’s versions are particularly significant because regulators have said they won’t let banks skate by with poorly formulated plans. Expectations are high for them to come down hard on one or more banks. “I think there’ll be a couple of heads on spikes,” said Karen Shaw Petrou, managing partner of the financial regulatory consulting group Federal Financial Analytics. Federal Reserve Chairwoman Janet Yellen set the stakes during congressional testimony in February, indicating that her agency is ready to call out banks whose resolution plans are not up to the regulators’ satisfaction.