Dive Brief:

• The Federal Reserve and the Federal Deposit Insurance Corp. (FDIC) found "shortcomings" in the resolution plans of six of the nation’s largest banks, the regulators said Tuesday. The regulators added that they didn’t find more severe "deficiencies" in the U.S.’s eight global systemically important banks (G-SIBs).

• The six banks are: Bank of America, Bank of New York Mellon, Citigroup, Morgan Stanley, State Street and Wells Fargo. ​Regulators did not find shortcomings in the plans of JPMorgan Chase or Goldman Sachs.

• Resolutions plans, or "living wills," describe a bank’s strategy to safely dissolve during a crisis without hurting the financial system in accordance with the Dodd-Frank Act.​

Dive Insight:

Fed officials have often said the nation’s banks are in better shape than they were at the height of the financial crisis.

Tuesday’s report shows banks have improved their resolution plans since 2016, when the Fed cited deficiencies in five G-SIBs' living wills and ordered them to make significant revisions, according to Bloomberg. Regulators said the six banks have until the end of March to address the shortcomings.

"Each firm made significant progress in enhancing its resolvability and developing resolution-related capabilities but all firms will need to continue to make progress in certain areas," the agencies said in a joint release.

The regulators said they sent letters to the banks to confirm the agencies expect to focus on testing the resolution capabilities of the banks when reviewing their next plans in 2021.

"Resolving a large bank would be challenging and unprecedented, and the agencies expect the firms to remain vigilant as markets change and as firms' activities, structures, and risk profiles change," they said.

Overall, however, the number of G-SIBs whose plans had shortcomings jumped from four banks in 2017, the last time regulators tested their living wills.

Bank of America, Goldman Sachs, Morgan Stanley and Wells Fargo had successfully addressed their prior shortcomings identified in 2017, the agencies said Tuesday​.

"The largest banks have been making steady progress, and the regulators are in greater agreement on what progress is than in prior rounds," Karen Petrou, managing partner of regulatory advisory firm Federal Financial Analytics, told The Wall Street Journal.