Regulators Give First Feedback to Financial Firms on 'Living Wills'

By Ryan Tracy 

WASHINGTON--U.S. regulators gave three large nonbank financial firms initial feed back on the "living wills" they must create to describe how they would go through bankruptcy without causing broader economic damage.

The firms-- American International Group, Inc., Prudential Financial Inc., and General Electric Capital Corp.--have been designated "systemically important," a label that comes with a requirement to draft credible plans for their own demise.

The Federal Reserve and the Federal Deposit Insurance Corp. said the three firms need to make improvements before they submit new versions of the plans at the end of this year. For instance, they asked for more details on how the firms would overcome obstacles such as maintaining order at all their global offices during a bankruptcy.

But the regulators didn't strike the same harsh tone they took with the largest U.S. banks last August, when they issued a rebuke about the plans' credibility and directed the banks to make significant revisions.

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