As the US Federal Reserve finds the banks well-capitalized in its latest stress results, per Reuters, large banks will no longer face pandemic-era restrictions on how much they can spend buying back stock and paying dividends.
The central bank said the test found 23 of the largest firms would suffer a combined $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.
The results were met by a sigh of relief on Wall Street, where firms had been limited on what they can pay out to investors.
As the news suggests the Fed’s indirect recalling of the pandemic-led relief measures, market players do worry for the monetary policy adjustments and the same weigh on the risk appetite.
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