JPMorgan, Goldman Need Better Capital Plans

5 years 3 months 1 week ago Thursday, March 14 2013 Mar 14, 2013 Thursday, March 14, 2013 5:10:24 PM CDT March 14, 2013 in News
By: Associated Press

NEW YORK - JPMorgan Chase and Goldman Sachs need better plans for coping with a severe recession, the Federal Reserve said Thursday, giving the banks until September to revise them.

The announcement came as part of the Fed's so-called "stress tests," its annual check-up of 18 of the country's big banks. The government runs the tests to see how the banks would fare in a severe recession. As a result of the tests, it also tells each bank whether it's allowed to raise its dividend, the quarterly payout it gives to stockholders, or buy back more of its own shares.

The Fed said that JPMorgan and Goldman were allowed to start any dividend increases or share buybacks they may have asked for. That privilege would be withdrawn only if they didn't submit new capital plans that satisfy the Fed.

Ally Financial and BB&T Corp. fared worse: The Fed forbade them from going through with any dividend increases and share buybacks they may have asked for.

But overall, the Fed approved requests outright from 14 of the 18 banks it was examining, including Citigroup, Wells Fargo, Morgan Stanley and Bank of America.

Dividends and share buybacks are important to ordinary investors, and banks. The banks know that their investors suffered big losses in the financial crisis, and are eager to mollify them. Some stockholders, especially retirees, rely on dividends for a key portion of their income.

Buybacks are also aimed at helping stockholders. By reducing a company's number of outstanding shares, earnings per share can increase.

The Fed didn't specify what each bank had asked for: dividend increases, share buybacks or both. The banks are allowed to release that information, but don't have to. For instance, Citigroup and Bank of America both said they got permission to buy back shares, but didn't ask to raise their dividends. Both pay a quarterly dividend of a penny, or four cents a year.

The stress tests assumed that the banks would raise dividends and share buybacks as requested. Those measures might be good for shareholders but they can also deplete the financial cushions banks need in emergencies.

To "pass" the tests, the banks needed to post a capital ratio of at least 5 percent in those projected scenarios.

More News

Grid
List
KANSAS CITY - The Kansas City Police Department has issued an Amber Alert for Brajean Sledge, a 15-year-old girl who... More >>
2 hours ago Friday, June 22 2018 Jun 22, 2018 Friday, June 22, 2018 10:29:00 AM CDT June 22, 2018 in News
McALLEN, Texas (AP) — Immigration enforcement on the U.S.-Mexico border was plunged deeper into chaos over President Donald Trump's... More >>
4 hours ago Friday, June 22 2018 Jun 22, 2018 Friday, June 22, 2018 7:52:00 AM CDT June 22, 2018 in News
JEFFERSON CITY – Gov. Mike Parson signed his first five bills as Missouri's governor Friday. The bills he signed... More >>
5 hours ago Friday, June 22 2018 Jun 22, 2018 Friday, June 22, 2018 7:17:00 AM CDT June 22, 2018 in News
(CNN) -- More than 30 children attending a summer camp in Florida were taken to the hospital Thursday after they... More >>
5 hours ago Friday, June 22 2018 Jun 22, 2018 Friday, June 22, 2018 7:12:00 AM CDT June 22, 2018 in News
MORGAN COUNTY - Authorities said a Gravois Mills woman died in a one-vehicle car accident near Laurie, Missouri. According... More >>
6 hours ago Friday, June 22 2018 Jun 22, 2018 Friday, June 22, 2018 6:32:00 AM CDT June 22, 2018 in News
JEFFERSON CITY - A statewide campaign encourages expecting mothers to monitor their infant's movement in the womb. The Missouri... More >>
8 hours ago Friday, June 22 2018 Jun 22, 2018 Friday, June 22, 2018 4:14:00 AM CDT June 22, 2018 in News
NEW BLOOMFIELD - After months of tension between citizens and city officials, the city council met for the first time... More >>
15 hours ago Thursday, June 21 2018 Jun 21, 2018 Thursday, June 21, 2018 9:30:00 PM CDT June 21, 2018 in News
AUXVASSE - Police in Auxvasse posted a warning on Facebook Wednesday about unlicensed salesmen in the area, but the company... More >>
17 hours ago Thursday, June 21 2018 Jun 21, 2018 Thursday, June 21, 2018 7:15:00 PM CDT June 21, 2018 in News
JEFFERSON CITY - 1 and 6 males are sexually abused by the time they are 18. For the first time... More >>
17 hours ago Thursday, June 21 2018 Jun 21, 2018 Thursday, June 21, 2018 6:49:00 PM CDT June 21, 2018 in News
COLUMBIA - The University of Missouri is changing some of its rules and regulations to offer more leave and layoff... More >>
19 hours ago Thursday, June 21 2018 Jun 21, 2018 Thursday, June 21, 2018 5:34:00 PM CDT June 21, 2018 in News
COLUMBIA - A Supreme Court ruling that allows states to charge online retailers sales tax has Columbia businesses rejoicing. ... More >>
19 hours ago Thursday, June 21 2018 Jun 21, 2018 Thursday, June 21, 2018 5:18:00 PM CDT June 21, 2018 in News
COLUMBIA - A judge has decided in favor of University of Missouri graduate students who want to unionize. The... More >>
19 hours ago Thursday, June 21 2018 Jun 21, 2018 Thursday, June 21, 2018 4:37:00 PM CDT June 21, 2018 in News
HUNTSVILLE – A man accused of killing a Moberly woman five years ago was found guilty of murder in the... More >>
20 hours ago Thursday, June 21 2018 Jun 21, 2018 Thursday, June 21, 2018 4:01:00 PM CDT June 21, 2018 in News
WASHINGTON - Gov. Mike Parson met with President Donald Trump Thursday to discuss Missouri's top priorities. “I appreciate President... More >>
20 hours ago Thursday, June 21 2018 Jun 21, 2018 Thursday, June 21, 2018 3:51:00 PM CDT June 21, 2018 in News
JEFFERSON CITY - Missouri mental health advocates showed up at a meeting Thurday to voice their concerns about budget cuts... More >>
21 hours ago Thursday, June 21 2018 Jun 21, 2018 Thursday, June 21, 2018 3:32:00 PM CDT June 21, 2018 in News
COLUMBIA – Although "Shwe Market International Foods" mainly sells Asian products and "Chihuahua Mexican Market" Hispanic products, both stores have... More >>
22 hours ago Thursday, June 21 2018 Jun 21, 2018 Thursday, June 21, 2018 2:34:00 PM CDT June 21, 2018 in News
COLUMBIA - MU has appointed Latha Ramchand as provost and executive vice chancellor for academic affairs. She was dean... More >>
22 hours ago Thursday, June 21 2018 Jun 21, 2018 Thursday, June 21, 2018 2:01:00 PM CDT June 21, 2018 in News
COLUMBIA - Police arrested a man and woman Wednesday after a reported robbery with a gun earlier in the week.... More >>
1 day ago Thursday, June 21 2018 Jun 21, 2018 Thursday, June 21, 2018 12:00:35 PM CDT June 21, 2018 in News
Columbia, MO
Broken Clouds 69°
1pm 72°
2pm 74°
3pm 75°
4pm 75°