The Federal Deposit Insurance Corporation and the Federal Reserve Board jointly published feedback letters on May 22, 2026 for the latest round of resolution plans — better known as “living wills” — filed by the largest US banks and major foreign banking organizations. The headline finding, written in a single sentence: “The agencies did not identify any shortcomings or deficiencies in these resolution plan submissions.”
That is a notable change from the prior round. In June 2024, the same two regulators flagged four of the eight US G-SIBs — Bank of America, Goldman Sachs, JPMorgan Chase, and Citigroup — for derivatives-related shortcomings, and the FDIC went further with Citigroup, calling its weakness a “deficiency” before being overruled by the Fed under the agencies’ joint rule (June 21, 2024 feedback letters). The 2025 plans, submitted last July and reviewed over the past ten months, closed those gaps.
What “living wills” are — and why this is a capital-markets story
Section 165(d) of the Dodd-Frank Act (12 U.S.C. § 5365) requires large bank holding companies and certain non-bank financial firms to file a resolution plan describing how the firm could be wound down “in a rapid and orderly manner” if it failed, without taxpayer support and without destabilizing the broader financial system. The largest, most complex firms — the US G-SIBs — file on a two-year cadence; other covered banks file every three years (Federal Reserve resolution-plans hub).
The reason capital markets care: when these plans are perceived as credible, regulators have more options short of a bailout in a crisis, and that lowers the implicit subsidy embedded in bank funding curves. When a plan is judged inadequate, the firm can be forced to raise more capital or liquidity, divest assets, or even restructure — outcomes that hit shareholders and bondholders directly. Bond traders read these letters carefully.
Shortcoming vs deficiency — the language that matters
The two labels are very different. Per the agencies’ own definitions used in the 2024 cycle, a shortcoming is “a weakness that raises questions about the feasibility of the plan,” while a deficiency is “a weakness that could undermine the feasibility of the plan.” A deficiency triggers a formal requirement to resubmit; a shortcoming must be addressed in the next plan but does not by itself force corrective action.
The 2026 letters cite neither for any of the eight US G-SIBs or the 56 foreign banking organizations reviewed in this cycle. That is the cleanest collective verdict the program has issued in years.
The eight US G-SIBs in this cycle
These are the firms whose 2025 plans were just cleared. Asset figures are for the lead US bank subsidiary, per the Fed’s Large Commercial Banks report as of December 31, 2025; holding-company consolidated assets are larger.
| Holding Company | Lead Bank Subsidiary | Nat’l Rank | Consolidated Assets |
|---|---|---|---|
| JPMorgan Chase & Co. | JPMorgan Chase Bank, N.A. | 1 | $3.75T |
| Bank of America Corporation | Bank of America, N.A. | 2 | $2.64T |
| Citigroup Inc. | Citibank, N.A. | 3 | $1.84T |
| Wells Fargo & Company | Wells Fargo Bank, N.A. | 4 | $1.82T |
| Goldman Sachs Group | Goldman Sachs Bank USA | 7 | $645B |
| Bank of New York Mellon | Bank of New York Mellon | 10 | $381B |
| State Street Corporation | State Street B&TC | 11 | $361B |
| Morgan Stanley | Morgan Stanley Bank, N.A. | 14 | $253B |
Chart: Lead bank subsidiary assets. Source: Federal Reserve Large Commercial Banks, 12/31/2025.
The derivatives backstory
The 2023-cycle plans of Bank of America, Goldman Sachs, JPMorgan Chase, and Citigroup were flagged in June 2024 for weaknesses around how the firms would unwind their derivatives portfolios in resolution — a particularly thorny problem because a stressed dealer’s swap book can move tens of trillions of dollars in notional and is interconnected with virtually every other large bank. The 2026 letters confirm that “each derivatives-related weakness identified in the 2023 plans from Bank of America, Goldman Sachs, JPMorgan Chase, and Citigroup has been satisfactorily addressed.”
For credit-bond traders, that is the most consequential line in the release. Resolution-quality derivatives unwinds were the single most cited concern after the 2023 regional-bank stress; the clean letter removes a tail-risk overhang that had been intermittently priced into bank credit since then.
Foreign banking organizations
The cycle also covered 56 foreign banking organizations operating in the US, with HSBC North America Holdings the most prominent in the detailed-feedback group. The FDIC’s parallel release confirmed that 53 additional foreign banking organizations received template letters in lieu of full reviews. None of the FBOs drew shortcomings or deficiencies in this round (FDIC press release, May 22, 2026).
What’s next
Under the joint Fed/FDIC rule, the eight US G-SIBs file full plans on a two-year cycle — that puts the next round of submissions in 2027 and feedback letters in 2028. The clean 2025 round resets the bar; any backsliding in 2027 will be measured against today’s letter.
Sources
- Federal Reserve Board — Agencies publish resolution plan feedback letters (May 22, 2026)
- FDIC — Agencies Publish Resolution Plan Feedback Letters (May 22, 2026)
- Federal Reserve Board — June 21, 2024 resolution-plan feedback letters (defines shortcoming vs deficiency)
- Federal Reserve — Resolution Plans (Living Wills) hub
- 12 U.S.C. § 5365 — Dodd-Frank §165(d) resolution-plan requirement
- Federal Reserve — Large Commercial Banks (12/31/2025)
Disclosure: This article was produced with AI assistance and reviewed before publication. It is for informational purposes only and is not investment advice.