Stress tests

Deutsche Bank says it’s on track to meet its financial targets while Commerzbank's top two executives resign; recent Fed stress test results show European banks' poor performance in U.S. continues.

Six of the eight regional banks that announced their stress capital buffers on Tuesday said they will need just a 2.5% cushion to weather an economic downturn. All eight said they’ll keep their dividends steady.

In response to the Federal Reserve's stress tests, Wells said it will lower its third-quarter distribution to shareholders. Meanwhile, JPMorgan Chase, Goldman Sachs and five other companies announced stress test capital buffers that exceed the minimum requirement.

Some observers said the central bank should have suspended dividends entirely in response to an unprecedented economic emergency caused by the pandemic. Others said its more cautious moves were appropriate because big banks' capital is strong and the economy could bounce back.

The Fed stopped short of banning payouts entirely following bank stress tests; banks get greater freedom to invest in venture capital funds and reduced collateral on swap trades.

In the most sweeping capital distribution order since the financial crisis, the Federal Reserve says it will prohibit big banks from buying back their stock in the third quarter and limit dividend payments to second-quarter levels.

Borrower relief is necessary in a national emergency, but if the exclusion of the deferred loans from troubled-debt restructurings is extended past the end of the year, safety and soundness could be compromised.

The embattled German payments company filed for insolvency, while its former COO is either on the run or looking for the missing $2 billion; the giant asset manager is looking to hire more college graduates rather than poach junior bankers.

The lawmakers argued in a letter to the Federal Reserve that suspending dividend payouts would be the "prudent course of action," allowing banks to build their capital cushions and continue lending during the coronavirus pandemic.

Business continuity plans should be used constantly, not just when the crisis is at its peak, says the New York Fed’s head of financial services.