One of the signal, but formerly obscure, achievements of the Dodd-Frank Act, passed in the wake of the financial crisis, was the requirement that big banks write “living wills” in preparation for their eventual deaths. These documents (the technical term is “resolution plans”) specify everything from how subsidiaries might continue to operate after a head office has declared bankruptcy to how I.T.-service contracts can be transferred to new ownership. Their larger aim is to insure that, in the event of a 2008-level crisis, the big banks can die with dignity, so to speak, instead of requiring taxpayers to bail them out. But, as we discovered last week, when the Federal Reserve and Federal Deposit Insurance Corporation declared the majority of the wills filed last July to be inadequate, large financial institutions can be as reluctant as the rest of us to contemplate their own mortality.

The living-will process has proved almost as controversial in finance as it is in health-care policy, in part because the question of whether a credible one can be created for any particular bank is intertwined with whether it’s too big to fail. If regulators consistently find the plans wanting, they have the power, under Dodd-Frank, to require the banks to begin selling off assets—effectively, to begin breaking up. Thus far, the eight U.S. banks that have been designated “global systemically important” aren’t scoring well. First, in 2013 and 2014, the Federal Reserve and F.D.I.C. rejected preliminary plans submitted by the banks. These were broadly understood to be trial runs, in fairness, but the experience didn’t appear to have helped them with the 2015 submissions. Regulators rejected the plans filed by three of the biggest banks in the country—JPMorgan Chase, Bank of America, and Wells Fargo—as well as by B.N.Y. Mellon and State Street, two “trust banks” that are regarded as systemically important because of their role in managing securities transactions. Another two banks failed to have their plans fully accepted; Goldman Sachs’s living will was rejected by the F.D.I.C., and Morgan Stanley’s by the Fed. Citigroup was the only one of the eight banks to pass both hurdles, but even Citi was told by the Fed that its living will had “significant shortcomings.” Every bank that received a failing grade was told to return in October with a plan that explicitly considered the issues it hadn’t properly accounted for.

There is real pressure on the banks, at the moment, to get their resolution plans right. At last Thursday’s Democratic debate, Dana Bash, one of the moderators, asked Hillary Clinton whether, given the banks’ failure to come up with viable living wills, she would “call on regulators to start the process of breaking up these banks, something that the law not only allows but actually explicitly encourages.” (And something, Bash didn’t need to say, that Bernie Sanders is plenty eager to do.)

“Absolutely,” Clinton replied.

There are a few possible explanations for why the banks have collectively failed, thus far, to file credible living wills. The banks themselves say (with qualified support from the Government Accountability Office) that the living wills are unprecedentedly big and difficult compliance exercises and that the requirements weren’t made clear enough. Another possibility is that the big banks are obfuscating, in the belief that the political will won’t really be there to break them up. (Why provide regulators with the recipe for hemlock juice when champagne will be back on the menu once election season is over?) But there is, too, the existential question of contemplating one’s own mortality: the notion that the banks might find it hard to acknowledge and address the conditions under which they might need to be broken up. In some respects, this is the most distressing of the three, because it suggests an endemic and intractable cultural problem, in which the banks are trying to comply but aren’t able to do so.

Late last year, the European Banking Authority issued a report about recovery plans that offered some evidence of this phenomenon. (European banks are required to file living wills, as well, though regulators there don’t have specific powers to break them up.) The report found that, instead of concentrating on realistic scenarios under which European banks might need to be wound up, the institutions tended to create pseudo-worst-case scenarios that wouldn’t likely be relevant in a real crisis. The banks also proved to be bad at considering problems that promise to affect them specifically, and particularly bad at considering cases in which they’ve caused a problem that can’t easily be put right. Under such scenarios, they tended to assume that there would be “mitigating actions” they could take, even though the history of financial crises shows that when the pressure is on, they are just as likely to take aggravating actions, such as adding to losing positions or increasing their dependence on overnight funding. The over-all picture presented by the report was one not of incompetence or obfuscation but of denial.

The American banks’ living wills offer examples of the same pattern. The feedback letter the Fed provided to JPMorgan Chase, for example, points out that the bank has no model or process for estimating how much money it would need to have on hand in order to fund the process of closing down key subsidiaries. This ought to have been a straightforward, if time-consuming, exercise of drawing up scenario analyses. Instead, the bank often assumed that its cash-flow needs would be covered by the parent company. Morgan Stanley’s plan, meanwhile, relied heavily on being able to move funding between different companies in its global group when under stress, even though Lehman Brothers found that it was unable to do this after the parent company filed for bankruptcy in September, 2008. Bank of America had been specifically told to indicate what kinds of events would trigger a decision by its board to file for bankruptcy but instead offered only ones that would lead it to “escalate information” to the board. Even Citigroup’s successful plan assumed that its derivatives-trading arm would continue to be able to find people to trade with while the bank was being wound up, an assumption that regulators understandably described as “optimistic,” given that traders tend not to be keen on dealing with subsidiaries of insolvent banks.

To adapt a maxim, it appears that the banks have failed to prepare because they are not prepared to fail. The Fed asks for a set of liquidity forecasts, and a bank offers a blithe assumption that it has enough money on hand to prepare for the worst. The F.D.I.C. asks another bank what will happen to assets that are effectively trapped in its foreign subsidiaries, and the bank assumes that everyone will coöperate and money will flow freely across borders. Again and again, the banks’ position is “Let’s not meet trouble halfway.”

Often, when we attribute the failures of the financial industry to institutional psychology or culture, we’re referring to its penchant for greed and undue risk-taking. But the inadequate living wills suggest that these two problems may be less significant than another, larger one. Greedy gamblers can rig interest rates, steal money, or accumulate dangerously large portfolios, but it takes something more than that to blow up an entire bank, let alone a financial system. To do the latter requires endemic, widespread denial, bolstered, perhaps, by something akin to an ego-defense strategy.

Later this year, the big banks will be given another shot at getting their living wills right. It’s important for the country that they do so, because we can’t have a sensible debate about whether and how to break up these institutions until we know how much of a risk they pose. And it’s important for the banks, too, if they wish to survive in their current form—especially if the current political climate persists after the election. Sanders himself has argued that it would be better for the banks to figure out how to dissolve themselves. (“The President is not a dictator,” he told the New York Daily News_._) But, in practice, if they find it too culturally and institutionally difficult to confront the worst, it might be better for everyone concerned if, as Bash suggested, an unemotional bureaucrat stepped in and did it for them.