June 19, 2020 / 4:03 PM / in 22 days

Federal Reserve to set bank capital levels via pre-pandemic stress test model - Quarles

WASHINGTON, June 19 (Reuters) - The U.S. Federal Reserve will still rely on a stress test built before the onset of the coronavirus pandemic to set big bank capital requirements, and rely on extra pandemic-specific analysis to inform whether banks can pay out funds to investors, a top official said Friday.

Fed Vice Chair Randal Quarles said in a speech that the Fed is testing banks against three possible economic trajectories of varying severity to see how they perform, citing “unprecedented uncertainty” about the pandemic’s long-term economic impact. Those results will help the Fed decide whether banks can pay out extra funds to investors via dividends or share repurchases. (Reporting by Pete Schroeder Editing by Chizu Nomiyama)

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