WASHINGTON: Large banks will no longer face pandemic-era restrictions on how much they can spend buying back stock and paying dividends, the Federal Reserve announced Thursday after finding the firms would remain well capitalized in its latest stress test.
The central bank said the test found 23 of the largest firms would suffer a combined US$474 billion in losses under a hypothetical severe downturn, but that would still leave them with more than twice as much capital required under Fed rules. As a result, the Fed will lift limits on buybacks and dividends it had put in place at the onset of the coronavirus pandemic.