Federal Reserve releases stress test results
FOX Business’ Edward Lawrence says the Federal Reserve will suspend stock buybacks for banks and cap the dividends banks can give in the third quarter to the second quarter.
U.S. banks will face some temporary restrictions imposed by the Federal Reserve so these financial institutions can remain healthy as the global economy emerges from the coronavirus pandemic.
Continue Reading Below
"The Board took several actions following its stress tests to ensure large banks remain resilient despite the economic uncertainty from the coronavirus event" the statement read which includes the following actions to be imposed during the third quarter:
Suspending share repurchases
Dividend payments capped and allowing dividends according to a formula based on recent income
Long-term capital plans to be re-evaluated
"The banking system has been a source of strength during this crisis," Vice Chair Randal K. Quarles said in the statement "and the results of our sensitivity analyses show that our banks can remain strong in the face of even the harshest shocks."
CLICK HERE TO READ MORE ON FOX BUSINESS
The 3Q pause is the latest in a series of aggressive actions by U.S. policymakers to combat the economic fallout from the coronavirus. In March the Fed began an unprecedented rate-cutting cycle which has taken interest rates to zero.
Fed Vice Chair Richard Clarida, last Friday, told FOX Business, the Fed can and probably will do more to help further the economic recovery which remains fragile.
FED CAN AND MAY DO MORE: VICE CHAIR CLARIDA
|JPM||JP MORGAN CHASE & CO.||97.96||+3.30||+3.49%|
|BAC||BANK OF AMERICA CORP.||24.72||+0.91||+3.82%|
|WFC||WELLS FARGO & COMPANY||27.37||+1.25||+4.79%|
|GS||GOLDMAN SACHS GROUP INC.||207.10||+9.08||+4.59%|
VOLCKER RULE GETS REPREIVE
Big banks and financials rose on Thursday, helping lift the broader market after the Fed eased some restrictions from the Volcker Rule which investors felt may have hampered earning power.
GET FOX BUSINESS ON THE GO BY CLICKING HERE
Source: Read Full Article