Fed caps dividends after stress tests show big potential losses
Brainard says decision not enough as tests show loan losses could exceed those during financial crisis
The Federal Reserve is limiting the amount of dividends large US banks can distribute after stress tests showed lenders’ capital levels could fall sharply.
The impact of the coronavirus pandemic could see some large banks’ loan losses hitting levels much higher than the average reached during the financial crisis in 2008.
The stress tests revealed some banks’ capital levels could fall very close to the minimum requirements, making it “prudent” to restrict some capital distributions, the Fed
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