https://www.cnbc.com/amp/2020/06/25/...mpression=true
- The Federal Reserve put new restrictions on the U.S. banking industry Thursday after its annual stress test found that several banks could get uncomfortably close to minimum capital levels in scenarios tied to the coronavirus pandemic.
- The Fed said in a release that big banks will be required to suspend share buybacks and cap dividend payments at their current level for the third quarter of this year. The regulator also said that it would only allow dividends to be paid based on a formula tied to a bank's recent earnings.
- Furthermore, the industry will be subject to ongoing scrutiny: For the first time in the decade-long history of the stress test, banks will have to resubmit their payout plans again later this year.
- Under the harsher scenarios, banks could rack up as much as $700 billion in loan losses as unemployment hits 19.5%, a development that would push some banks close to their regulatory minimums for capital.