Stress tests

The Federal Reserve imposed the restrictions after conducting supplemental stress tests tied to the pandemic. But Vice Chair of Supervision Randal Quarles says it is now clear banks would have had sufficient capital regardless.

The Alabama company is instead on the hunt for nonbank acquisition candidates as well as employees or clients it could lure away from regional banks that have announced merger deals recently, John Turner says.

Federal Reserve Gov. Lael Brainard said "scenario analysis" is distinct from traditional regulatory tools to assess capital strength, but can measure the long-term impact of weather events and the transition to a greener economy.

Nineteen of the nation's largest banks must show how they'd withstand pressures in the commercial real estate and corporate debt markets that would accompany a severe global recession.

Under the Federal Reserve’s loosened restrictions, big banks can buy back a limited amount of their stock starting next quarter, but only JPMorgan Chase has announced detailed plans to do so.

The Federal Reserve's “midcycle” assessment — conducted in light of the COVID-19 pandemic — said the path of the economic recovery is still uncertain even though the banks that were evaluated maintained adequate capital levels under hypothetical scenarios.

As with most things related to 2020, COVID-19 will be a deciding factor as the Federal Reserve considers whether banks are able to increase their dividends or resume share buybacks.

Executives from U.S. banks continue to play down near-term expectations, but they say customers are growing more confident ahead of the rollout of coronavirus vaccines, and that key commercial lending segments could drive an economic rebound.

Global regulators are considering a universal stress test for climate change that requires lenders to use a 30-year horizon, a difficult and speculative projection of the energy industry that could harm bank financials.

The proposed best practices would be modeled after federal servicing standards and be used to supervise nonbanks firms subject to state regimes.

The central bank issued a proposal aligning recent stress testing changes with supervisory standards that are tailored to an institution's size and complexity.

The Federal Reserve will continue its ban on share repurchases for banks with more than $100 billion of assets into the fourth quarter and will cap dividend payments using a formula based on recent income.

Lenders should be subjected to tough reviews of their readiness for economic threats posed by severe weather, required to disclose risks lurking in their portfolios and perhaps forced to set aside extra capital, a government study recently recommended.

The agency has scheduled an extra assessment of institutions' strength to incorporate more recent economic data during the pandemic.

Lenders press Congress to restart — and revamp — the Paycheck Protection Program; Fed corrects stress test error for Morgan Stanley, Goldman Sachs; M&T's new fintech unit rolls out first product; and more from this week's most-read stories.

The central bank said it had miscalculated the loss rates for certain public welfare investments, which led to incorrect capital requirements for the two companies.

Under a rule issued in March, banks will build an additional capital cushion that is determined by their performance in the annual tests.

Policymakers have eased some rules and the Supreme Court recently dealt a blow to the Consumer Financial Protection Bureau. But as the landmark legislation approaches its 10th anniversary, the post-crisis regulatory regime has stayed largely intact.

Randal Quarles, who is also chairman of the Financial Stability Board, said FSB members must do more to prepare for bank failures.

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.