US Banking 'Living Wills' Receive Clean Bill of Health

The nation’s largest banks received a positive assessment of their preparedness for potential failures, as the Federal Reserve and Federal Deposit Insurance Corporation jointly announced they identified no new shortcomings in the 2025 resolution plans submitted by fifteen banking organizations with over $250 billion in assets.

The agencies’ review, focused on so-called ‘living wills’ – detailed strategies for orderly resolution in the event of financial distress – indicates a substantial level of stability within the financial system. The finding represents a notable shift from prior years, where regulators consistently identified deficiencies requiring remediation. This year’s assessment covered American Express Company, Barclays PLC, BNP Paribas, Deutsche Bank AG, and UBS Group AG, among others.

Notably, the agencies also confirmed the satisfactory resolution of a previously identified shortcoming in BNP Paribas’ 2021 resolution plan. This closure underscores a broader trend of improved compliance and risk management practices among the institutions under review. The agencies’ joint statement highlights the importance of ongoing monitoring and refinement of these plans to ensure the resilience of the financial system.

The absence of new identified deficiencies suggests a maturing regulatory framework and a corresponding strengthening of internal risk management capabilities within the banking sector. While the resolution plans detail strategies for an orderly failure, the current assessment signals a reduced likelihood of needing to invoke those plans in the near term, bolstering confidence in the overall health of the financial system. The finding stands in contrast to recent regulatory signals focused on increased scrutiny of Indian banking and financial institutions, suggesting a diverging regulatory approach and risk profile between those markets and the US.