Big Banks Clear First Phase of Federal Reserve Stress Tests
The stress tests, which were introduced early in the Obama administration and are required by the 2010 Dodd-Frank financial overhaul, are intended to ensure
that banks have enough capital to cover severe losses like those sustained during the mortgage crisis and to avoid another taxpayer-funded bailout.
Thursday’s results are very likely a good harbinger for next week’s even more consequential test, when
Fed officials will decide whether to approve the banks’ plans to pay dividends and repurchase shares.
The nation’s largest banks breezed through the first phase of their annual tests on Thursday, demonstrating
that they have enough capital to withstand the type of financial shock that nearly ruined the industry and the world economy in 2008.
Next week, the Fed will decide whether to approve plans to pay dividends and repurchase shares.
The banking system, according to the test results, has an even larger capital cushion than it did going into last year’s exam.
By MICHAEL CORKERYJUNE 22, 2017
Once universally dreaded by banks, the Federal Reserve’s annual stress tests are becoming less stressful.
Wall Street analysts expect that those payouts will increase this year — a big plum
for investors who have gone through nearly a decade of lagging stock prices.