TechFlow news — On December 24, according to CNBC, a person familiar with the matter said several major banks are planning to sue the Federal Reserve over its annual bank stress tests. The individual said the lawsuit is expected to be filed this week, possibly as early as Tuesday morning local time. The Fed's stress test is an annual routine that requires banks to maintain sufficient capital buffers against bad loans and sets limits on stock buybacks and dividends.
After markets closed on Monday this week, the Federal Reserve announced in a statement its plans to adjust the bank stress testing regime, though it did not provide detailed specifics on the proposed changes to the annual framework. However, these adjustments may not be enough to alleviate banks' concerns about burdensome capital requirements. The Fed stated, "The proposed adjustments are not intended to have a material effect on overall capital requirements."
Greg Baer, CEO of the Bank Policy Institute (BPI), which represents large banks including JPMorgan Chase, Citigroup, and Goldman Sachs, welcomed the Fed’s announcement, calling it "a first step toward greater transparency and accountability" in a statement. Nevertheless, Baer hinted at potential further actions, saying, "We are closely reviewing today’s statement and considering additional steps to ensure timely reforms that are both legally sound and consistent with sound policy."
