Fed prepares banks to the crisis

International banks can no longer have access to the Fed’s discount window as part of their so-called “lifetime of wills.”

11 banks, including Citigroup and Barclays, it was stated that they had made unrealistic estimates of how to behave customers, counterparties and investors in a crisis situation.

In private letters, August 5, American regulators have explained why they rejected the “lifetime of the will” of the largest banks in the world. Hundreds of banks have taken advantage of the discount window during the credit crisis of 2008

Critics say that, rather than to create an atmosphere appropriate resolution of problems in the banking sector, in order to avoid panic that occurred after the collapse of Lehman Brothers, regulators create a situation in which the failure of a bank theoretically inevitable.

But the Fed and the Federal Deposit Insurance Corporation, under pressure, to avoid government subsidies in any crisis situation in the future, they want to force the banks to develop a plan of action in case of emergency, which does not imply government assistance, including access to the Fed’s discount window.

11 banks, including Citigroup and Barclays, it was stated that they had made unrealistic estimates of how to behave customers, counterparties and investors in a crisis situation.

Nevertheless, banks have not received any warning or guidance as to what they can no longer gain access to the discount window in case of problems in the framework of plans in 2013

Other people familiar with the situation say that the leadership in 2012 stipulated that banks should not rely on the fact that the Government of the United States or any other country will provide subsidies otherwise than in the ordinary course of business.

Fed officials said that “in his lifetime will” – is a learning process, and in 2012, banks were given a lot of freedom, but now regulators want banks to become more disciplined and united in their assessments. Submitting their “lifetime wills” this year to receive a response to plans for 2013, banks are required to show improvement in their plans for 2015 or faced with having to pay a fine.

Fed prepares banks to the crisis