Bank regulators flexed their muscles this week, refusing to sign off on “living will” contingency plans drawn up by banks whose health is deemed critical to the U.S. financial system. Eight banks that hold more than $250 billion in global assets were up for review before the Federal Reserve and the Federal Deposit Insurance Corp. Seven of them flunked the test on Wednesday, and now face an October deadline to refile.
What’s bad news for the megabanks, however, may be good news to their outside counsel. The annual plans, which run into the thousands of pages and require input from corporate, insolvency, tax, finance and other attorneys, can generate as many billable hours as complex M&A deals, according to lawyers involved. The banks may be smarting, but it just means more work for the lawyers.
