Wells Fargo Fails Regulatory 'Living Will' Test

Shares of Wells Fargo & Co WFC traded down in Tuesday’s after-hours session, after the company failed to deal with alleged “deficiencies” in its plan to manage its bankruptcy without recurring to a taxpayer bailout – a plan known as “living will.”

Regulators have imposed penalties on the company, including the prohibition to establish international bank units. The bank will also be barred from purchasing any non-bank subsidiaries.

On the other hand, JPMorgan Chase & Co. JPM, Bank of America Corp BAC,Bank of New York Mellon Corp BK and State Street Corp STT managed to avoid sanctions.

A press release out of Wells Fargo read:

In October 2016, Wells Fargo submitted a response to the Federal Reserve and FDIC regarding certain deficiencies cited in our 2015 Resolution Plan submission. We took feedback from our 2015 submission very seriously and took several steps to address it, including creating a program office dedicated to this effort, committing significant additional resources, and working deliberately to address these concerns.

As we disclosed in our public filing in October, we believe that we substantially enhanced our capabilities in each of these areas identified. However, we were informed today that we did not adequately remediate certain deficiencies.

Wells Fargo is committed to strengthening and enhancing its resolution planning processes, and we will continue to work closely with the agencies to better understand their concerns so that we can bring our resolution planning processes in line with their expectations. While we are disappointed with the determination issued by the agencies, we continue to be dedicated to sound resolution planning and preparedness. We believe we will be able to address the concerns raised today in the March 2017 revised submission.