The Federal Reserve Board released the first round of results from stress tests required under the Dodd-Frank Act.
With the release of the first numbers, industry representatives saw them as a sign of capital strength in banking. However, even though the results indicate the financial industry's increased capacity to handle another crisis, attention has moved on to what the Federal Reserve will say next week when a separate set of tests could determine the level of upcoming dividend payments and capital distributions.
In a note Thursday evening, Jaret Seiberg of Guggenheim Securities wrote: "We continue to believe it would be a mistake to read these results as saying the Fed next week will permit these banks to distribute more in dividends and buybacks than the modest increase over 2012 levels that we have been projecting."
American Banker's Joe Adler asks and answers everyone's frequently asked questions: What happened? What are the results? What does it all mean? and What is next?
For the full piece see "Cheat Sheet: What the Dodd-Frank Stress Tests Really Mean" (may require subscription).