US regulators rejected on Wednesday the bankruptcy contingency plans of five giant US banks, saying their weaknesses proved "too big to fail" remained a threat to the financial system.

Both the Federal Reserve and the Federal Deposit Insurance Corporation (FDIC) said the "living will" plans were "not credible" for Bank of America, Bank of New York Mellon, JPMorgan Chase, State Street and Wells Fargo.

The plans, required in the wake of the 2008 financial crisis, are supposed to demonstrate how the failure of a "systemically important" bank would not devastate the broader financial system.

"The goal to end too big to fail and protect the American taxpayer by ending bailouts remains just that: only a goal," said Thomas Hoenig, vice chairman of the FDIC, in a statement.

The five "too big to fail" banks were given until October 1 to improve the plans, which were required in the Dodd-Frank regulations governing systemically important banks after the failure of Lehman Brothers in 2008 threatened to bring down the financial system.

Democratic presidential hopeful Bernie Sanders backs the break-up of big banks, while Neel Kashkari, president of the Minneapolis Federal Reserve, has said the financial behemoths "continue to pose a serious, ongoing risk to our nation's economy."

But Richard Bove, an analyst at Rafferty Capital Markets and a defender of big banks, said the tendency of regulators to stiffen requirements was an overreach that weakens the ability of US banks to compete with other global banks.

The FDIC's Hoenig said the deficiencies in the five banks' living wills varied and included weaknesses on determining when to enter bankruptcy, assessing adequate liquidity and the transfer of capital to operating units in anticipation of bankruptcy.

Also worrying, the banks have gotten bigger and more complex since 2008 and have "excessively high leverage. If one of the banking giants were to fail, the others "would become suspect in their ability to withstand the shock," Hoenig said.

"Too easily one failure could become a systemic crisis." Failure to submit acceptable living wills by the five banks' October 1 deadline could result in higher capital requirements and other toughened standards, such as restrictions on bank operations.