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7h ago

Fed Sets Final Bank-by-Bank Capital Requirements Effective Oct. 1

The Fed describes the step as a transition toward smoothing stress-test swings through a proposed two-year averaging rule.

The Federal Reserve headquarters in Washington September 16 2015. The Federal Reserve, facing this week its biggest policy decision yet under Chair Janet Yellen, puts its credibility on the line regardless of whether it waits or raises interest rates for the first time in nearly a decade. REUTERS/Kevin Lamarque/File Photo

Overview

  • The totals reflect this year’s supervisory stress test, which the Fed says provides a forward-looking gauge of capital needs.
  • Each firm's common equity tier 1 requirement combines a 4.5% minimum, a stress capital buffer of at least 2.5%, and, for the largest firms, a systemic surcharge.
  • The Board plans to publish updated figures if it finalizes the averaging proposal that would blend 2024 and 2025 stress-test results.
  • Morgan Stanley’s stress capital buffer is under reconsideration at the firm’s request, with a final decision expected by September 30.
  • Banks breaching their stated totals face automatic limits on shareholder payouts and discretionary bonus payments.