WASHINGTON, June 24 - Big U.S. lenders are expected to show they have ample capital to weather any renewed turmoil during this week's Federal Reserve health checks, but will be conservative on investor payouts amid economic and regulatory uncertainties, analysts said.
Introduced following the 2007-2009 financial crisis, the annual exercise is integral to banks' capital planning. This year 32 lenders will be tested. Wall Street giants JPMorgan Chase , opens new tab, Citigroup , opens new tab, Bank of America , opens new tab, Goldman Sachs , opens new tab, Wells Fargo , opens new tab and Morgan Stanley , opens new tab usually attract the most scrutiny.
Spokespeople for Wells Fargo, Citi, Morgan Stanley, Truist and M&T Bank declined to comment while Goldman Sachs, JPMorgan, Citizens and Discover did not respond to requests for comment.The industry has performed well in recent years, although some critics say the tests are too easy. The Fed faced criticism after the 2023 bank failures for not having probed lenders' ability to withstand higher rates, for example.
As with 2023, the test also envisages a 40% slump in CRE prices, an area of concern as lingering pandemic-era office vacancies and high rates continue to stress landlords.
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