WASHINGTON (AP) — Top U.S. and British bank regulators, including Federal Reserve Chair Janet Yellen, have taken part in an exercise to see how they would handle the failure of a large multinational bank and communicate with each other.
The exercise held Monday was part of the regulators' efforts to prevent a repeat of the 2008 financial crisis and to end the need for governments to bail out big banks. The officials also included U.S. Treasury Secretary Jack Lew, U.K. Chancellor of the Exchequer George Osborne and Bank of England Governor Mark Carney.
They discussed U.S. and British procedures for regulators to take over and break up big banks that fail, the Federal Deposit Insurance Corp. said in a news release. The FDIC hosted the exercise, which took place at the agency's office in Arlington, Virginia, outside Washington.
Osborne, speaking to reporters Friday during the International Monetary Fund's annual meeting, said the aim of the exercise was to ensure that regulators would be able to handle the failures of major banks that previously were considered "too big to fail."
In the U.S. and other countries, regulators have imposed stricter capital requirements on the largest banks. The idea is for banks to increase their cushions against unexpected losses to reduce the chances of future big-bank failures and enable banks to keep lending through an economic downturn.
New bank requirements for capital and other rules were mandated by the U.S. Congress after the financial crisis, which struck in 2008 and ignited the deepest recession since the Great Depression of the 1930s. Hundreds of U.S. banks received taxpayer bailouts during the crisis, including eight mega-banks deemed by regulators to be so huge and interconnected that each could threaten the financial system if it collapsed. Among them are JPMorgan Chase & Co., Bank of America Corp., Citigroup Inc., Wells Fargo & Co. and Goldman Sachs & Co.