The Federal Reserve Board and the Federal Deposit Insurance Corporation announced the results of their joint review of the resolution plans—also known as living wills—that the eight largest and most complex domestic banking organizations submitted in 2021. Resolution plans must describe a financial company’s strategy for rapid and orderly resolution in bankruptcy in the event of its material financial distress or failure. The agencies identified a shortcoming in Citigroup Inc.’s resolution plan and did not identify any other shortcomings or deficiencies in the plans from the other banking organizations.

A shortcoming is a weakness that raises questions about the feasibility of the plan and could result in additional requirements if not corrected, but is not as severe as a deficiency. In Citigroup’s resolution plan, the agencies found a shortcoming related to data quality and data management concerns previously identified by the Board in its October 2020 enforcement action.

@federalreserve @FDICgov announce results of resolution plan review for largest and most complex domestic banks: https://t.co/f3FZyUBheS

— Federal Reserve (@federalreserve) November 23, 2022

The agencies previously identified shortcomings in the 2019 plans of Bank of America Corporation, The Bank of New York Mellon Corporation, Citigroup, Morgan Stanley, State Street Corporation, and Wells Fargo & Company, related to the ability of each firm to reliably produce, in stressed conditions, data needed to execute its resolution strategy. The agencies determined that the 2021 resolution plans of these firms successfully addressed those shortcomings.

The agencies have provided feedback letters to each of the firms. The letters note continued development of firms’ resolution strategies and capabilities and the expectation that work will continue. The feedback letters also note the expectation that the next plan review will include expanded testing of the firm’s resolution capabilities. For Citigroup the letter describes the specific weaknesses resulting in the shortcoming and the actions required by the agencies. A plan to address the shortcoming is due to the agencies by January 31, 2023.