Federal Reserve Eases Crisis-Era 'Living Will' Regulation

Chris Gaetano
Published Date:
Apr 8, 2019
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The U.S. Federal Reserve is expected to approve a measure that will reduce the frequency required for systemically important financial institutions to produce and update "living wills"— plans explaining how these institutions could be orderly wound down in the event of a catastrophic failure, according to the Wall Street Journal. The "living will" provision was enacted as part of the Dodd-Frank Act in response to the chaos caused by large financial institutions collapsing without a plan for an orderly wind down. Under current regulations, the largest and most systemically important banks in the world must file their emergency plans with the Federal Reserve every year. Under the proposal, though, they would have to do so only every four years, and file stripped-down versions at the halfway point. 

This is one of several recent moves by the Federal Reserve to roll back some of the crisis-era regulations that were put in place to prevent another "too big to fail" financial meltdown. Last year, the Fed proposed a new framework that removes many of these regulations for all but the largest banks. It is also looking to relax some of the requirements of the Volcker Rule, which restricted how much banks can engage in in proprietary trading and the degree to which they can own or control hedge funds or private equity funds. 

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