REPORT: Federal regulators will reject the ‘living wills’ of at least 4 Wall Street banks

Neil Hall/ReutersJP Morgan’s office in London.

At least half of the banks deemed “too big too fail” will reportedly have a key proposal rejected by federal regulators.

According to a report by The Wall Street Journal, regulators are planning to reject the “living wills” submitted by four of the eight “systemically important” banks.

These wills are documents outlining how the bank would handle a possible bankruptcy in a way that would not be burdensome on the public or lead to another bailout.

According to the Journal, which cites people familiar with the matter, JPMorgan Chase, BNY Mellon, State Street Bank, and Bank of America will most likely have their “living will” plans rejected by the FDIC and Federal Reserve. Citigroup is expected to recieve a positive ruling, while the fates of Goldman Sachs, Wells Fargo, and Morgan Stanley’s porposals are unknown.

The findings and rejection of the plans should be released to the public soon.

If the banks do not submit acceptable plans, they are subject to sanctions including higher capital requirements.

This has been an ongoing process for years since the wills were mandated as part of the Dodd-Frank reform Act. The banks submitted drafts last year. This is the third round of the ongoing process that began in 2014.

JPMorgan released its annual letter from CEO Jamie Dimon last week in which he emphasized the company’s a strong balance sheet and the resiliency of its assets.

The move also comes less than 24 hours before JPMorgan is set to report earnings for the first quarter.

JP Morgan declined to comment to Business Insider. State Street, Bank of America, and BNY Mellon did not immediately respond to a request for comment.

More to come…