The crisis of 2007 changed the nature of finance forever.

Initially, regulators had no idea how to deal with the catastrophe, as some of the biggest banks came close to going down in a glorious blaze of fire and taking the whole financial system with them.

Banks were so large and so deeply integrated into the economy that the world just couldn't let them fail.  So they had to be bailed out by governments, who pumped in taxpayer money to keep the banks afloat. Since then, the public has never looked at banks the same way again.

 “Too big to fail” was a term thrown around so often that we barely notice all the things regulators have done to tackle it. Now, whether or not regulators have done enough to avoid another collapse is still up for debate. We know the bankers involved weren’t punished for what happened. But that doesn’t mean that banks are just as unsafe as they were at the start of 2007 either.

Far from it. The Dodd-Frank Act of 2010 has had far-reaching effects on the banking sector and many of its effects have already started to make banks a lot safer. One key element of this act was the introduction of so-called “living wills” for banks.

To put it bluntly, “living wills” are just what they sound like. They are an instruction manual on what must be done if the bank does go under. They are technically called "resolution plans" and they are part of the effort to prevent another financial crisis. The theory goes that when the ship is sinking, everybody jumps out and there’s really no plan to dismantle the wreckage afterwards. An accountant will project cash flows out till the sixth day after a bankruptcy, but what happens on the seventh?

That’s where living wills come in. Banks are meant to write up a plan for what happens after they “die.” How do debt holders and depositors get their money back? Who’s responsible for organizing the dismantling of the enterprise and who pays the person doing this work?

Is it a grim thought? Of course. But just like your own will, this is deemed necessary by the regulators. Stress tests and capital requirements for banks can only go so far. Too big to fail banks still exist and there is a chance they may continue to if the regulators can’t figure out what to do if something goes wrong tomorrow.

That’s precisely why the big banks were asked to submit their plans earlier last year to the Federal Reserve and the Federal Deposit Insurance Corp. But it turns out the new rules are a lot more complex than they seem, and the Fed rejected the plans of five of the biggest banks on Wall Street earlier this year. J.P. Morgan, Wells Fargo & Co., Bank of New York Mellon Corp. and State Street Corp. all came up short and had their plans rejected. They now have to scrap their initial plans and rewrite them by the end of the year.

Banks such as Goldman Sachs, Morgan Stanley and Citigroup had their plans approved right away, so they are in the clear. But the problem with these documents is the sheer complexity of dismantling such massive enterprises.

Let’s take J.P. Morgan for example. The company reported $5.5 billion in earnings in the most recent quarter. Their stock shot up and the bank is now worth more than $232 billion. So it’s easy to see why disaster planning isn’t exactly high on the agenda for the company.

But perhaps part of the problem is the bank’s need for a detailed plan for a future collapse of an enormous and complicated company. The Fed has asked for a plan to rationalize the company’s subsidiaries, cash flow on the last days of a bankruptcy, the way a whole derivatives portfolio will be wound down and the reporting mechanisms that will allow the managers to know danger is imminent. All of these factors are hard to predict for tomorrow, let alone for a distant future that may never even come.

Regulators, it seems, are asking for details no one can really predict. So then why insist on it? Experts seem to agree that the whole thing is just an exercise to get the banks to consider the weaknesses of their business model. Much the same way writing your will is likely to make you reconsider some of your major life decisions, the regulators are likely hoping this exercise of contemplating one’s mortality may make banks more prepared for the worse if it ever does strike.

For the rest of us who don’t run multi-billion dollar banks every day, it may be some consolation to know the banks are now in a much better position to fight another potential economic crisis, and that they may have a plan for a graceful exit rather than a repeat of the treasury raid of the past decade.