U.S. Banks Spawn 10,000 Units

Financial firms used subsidiaries to limit taxes, avoid tighter regulation.

The biggest U.S. banks created more than 10,000 subsidiaries in the past 22 years as they expanded, using legal structures to pay lower taxes and escape tighter regulation, according to a Federal Reserve study.

JPMorgan Chase & Co., the largest U.S. lender, has the most units at 3,391, followed by Goldman Sachs Group Inc., Morgan Stanley and Bank of America Corp. with more than 2,000 each, the study by the Federal Reserve Bank of New York shows. Citigroup Inc., the third-largest lender, has 1,645.

Living Wills

Earlier this month, the largest lenders submitted blueprints to regulators explaining how they could be dismembered without bringing down the rest of the financial system. Dodd-Frank authorized the FDIC to use these so-called living wills to determine whether the biggest banks need internal restructuring -- such as ring-fencing some units with separate capital pools backing them -- to ensure that their dissolution would be orderly in case they fail.

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