Fed Caps Bank Dividends, Bans Share Buybacks Through September

The video discusses the current state of banks, focusing on their capitalization and the impact of COVID-19. It covers the suspension of share buybacks and the capping of dividends, as well as the combination of stress tests and CCAR. The Fed's analysis under severe stress scenarios is explained, highlighting the need for banks to maintain certain capital levels. The introduction of a sensitivity analysis due to COVID-19 is also discussed, projecting potential loan losses and capital ratio declines. The Fed's decision to suspend share repurchases and cap dividends is detailed, along with a dissenting opinion emphasizing the importance of capital conservation.

What is the minimum tier one equity capital percentage required for banks under the severe stress scenario?

• 6%

• 8%

• 4%

• 2%

What is the new component added by the Fed to the examination process due to COVID-19?

• Risk assessment

• Sensitivity analysis

• Liquidity analysis

• Profitability analysis

Under the sensitivity analysis, what is the range of projected loan losses for banks?

• $560 to $700 billion

• $600 to $800 billion

• $400 to $500 billion

• $500 to $600 billion

What decision did the Fed make regarding share repurchases for the third quarter?

• They are reduced

• They are suspended

• They are increased

• They are allowed with restrictions

Which Fed member dissented with the board's decision on capital payouts?

• Janet Yellen

• Lael Brainard

• Randal Quarles

• Jerome Powell