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Wednesday, June 27, 2012

Biggest banks (JP Morgan, Goldman Sachs, others) prepare plans to go bankrupt

The biggest US banks J.P. Morgan, Citigroup, Goldman Sachs Group, Morgan Stanley and Bank of America are preparing plans for quick liquidation in an emergency without hurting the nation’s economy.

The Wall Street street sign in New York (AFP Photo/Stan Honda)The financial majors have to provide the Federal Deposit Insurance Corp and the Federal Reserve with their roadmaps by the July 1. Also some European financial institutions such as Deutsche Bank, Barclays, Credit Suisse and UBS are preparing emergency plans by this deadline. Eventually about 124 banks are expected to submit plans to the FDIC by the end of 2013.
These plans, known as living wills, are prepared under provisions of the Dodd-Frank financial reform law designed to end the practice of bailing out the major banks by the government. 
Under the Dodd-Frank Act banks should consider liquidation through in two different approaches. The first one is through bankruptcy courts with banks negotiating with their creditors. While the second requires the FDIC to take control to provide harmless liquidation.
The liquidation plans follow J.P.Morgan's announcement last month that a trading debacle has cost it more than $2 billion, which aggravated concerns over the financial crisis. Last month J.P.Morgan CEO Jamie Dimon told the US Congress that the bank's wind down scenario would let it fail without a cost to taxpayers.
Meanwhile the banks and the regulators have been discussing what the plans are expected to include. The rules for creating the living wills are 74 pages long, including an explanations and comments. Experts say plans could be up to 4,000 pages long, providing details such as drafts of press releases and plans on acting in foreign jurisdictions in case of bankruptcy.
The Wall Street street sign in New York (AFP Photo/Stan Honda)15.06, 14:518 comments

'Banking is a gamble, hosted by a limited few' - Nobel laureate

As people in the street suffer from the ongoing banking turmoil a few individuals benefit, Edward Prescott, 2004 Nobel Prize winner in Economics, told Business RT. He believes the current crisis will not sweep passed the United States.
Justin Sullivan / Getty Images / AFP 11.05, 18:443 comments

JP Morgan Chase thumped by tricky financial gambling

The largest US bank JP Morgan Chase has taken a huge hit in casino-banking, losing $2 billion on its credit default swaps.
A Goldman Sachs sign is seen on the floor of the New York Stock Exchange (Reuters/Brendan McDermid)22.06, 19:393 comments

'Banks are dead' – Keiser

The global banking system is 'dead' and people need to push out from what he called "banking terrorists" and stand up for themselves, according to Max Keiser, the host of RT's Keiser Report.
Eurozone crisis

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