However, did you know that part of Dodd-Frank requires banks to submit a financial doomsday plan outlining how they will dissolve in the event of a catastrophic collapse?

Essentially, they are “living wills” that show what and how assets would be liquidated in a bankruptcy. The big catch is, these plans cannot rely on taxpayer bailouts. Banks must submit practical, realistic plans that leave no room for optimism.

So who’s checking this financial doomsday plan?

Banks must submit their “wills” to The Federal Reserve and the Federal Deposit Insurance Corporation for their review and approval. These are rigid reviews that show no leniency towards a bank. And its not just a an informal thing that banks submit as a symbolic gesture. These plans play a significant role in a bank’s continued operational existence. Dodd-Frank allows regulators to take extensive measures to make sure that a bank’s dissolution plan is credible.

Which banks were required to submit a financial doomsday plan this year?

Most of the nations top big banks were required to submit plans, including:

• Bank of America
• Bank of New York Mellon
• Citigroup
• Goldman Sachs
• JP Morgan
• Morgan Stanley
• State Street Corp
• Wells Fargo

American Insurance Group and Prudential Financial were given one-year extensions to submit a workable plan.

Investor Resources

You can read each bank’s financial doomsday plan on the Fed’s website. For more legal and financial news, check out our blog. Contact our investment-loss recovery attorneys if you believe you have been the victim of stock fraud or broker misconduct.

Last week, President Trump ordered a review of major banking regulations put in place following the 2008 financial crisis, largely comprising Dodd-Frank regulations. President Trump has made clear that rollbacks are a main objective for these reviews. Though the executive order only calls for a review, the Trump administration aims to make major cuts to banking regulations, largely affecting Dodd-Frank’s enforcement measures: Volcker Rule and the Consumer Financial Protection Bureau (CFPB). Here is an overview of the two main components of the Dodd-Frank banking regulations and what it means if they are cut:

The Volcker Rule

A big part of Dodd-Frank, the Volcker Rule raises capital requirements for banks and limits trading abilities. Banks are restricted from certain investment activities using their own accounts and also from retaining control over covered funds. The Volcker Rule acts to prevent speculative trading. If cut, big banks could be free to make unstable investment decisions.

Consumer Financial Protection Bureau

Another major component of Dodd-Frank, the CFPB was established by congress as a means of hands-on banking regulation and enforcement. The CFPB acts to protect consumers from aggressive and predatory investment banking and trading practices. In addition to taking legal action against unfair and deceptive practices, the CFPB also serves as an educational resources for consumers and investors. If cut, banking regulation could once again become largely decentralized and unable to accurately oversee banking practices.

Effects

Bankers and lenders laud President Trump’s decision to review current financial regulation under Dodd-Frank. Wall Street saw a noticeable bump in banking stock prices following Friday’s announcement. Despite lender and broker-dealer optimism, many consumers and regulators worry that loosened regulations will lead to a financial relapse and market crash.

Educational Resources

• See this report from Reuters for more info on President Trumps order for regulatory review
• Find out more about the CFPB by visiting their website
• Get more consumer news and tips by checking out our past blogs