Less Stressful Tests Seen Boosting U.S. Bank Payouts $30 Billion
After seven annual exercises in which at least one U.S. bank failed, all of the nation's 34 largest lenders will probably pass this year's Federal Reserve exam when results are revealed this week and next. That's because the toughest component of the analysis of how firms would fare during a hypothetical crisis, the so-called qualitative review, no longer applies to the majority of those being tested.
The easing pressure will allow banks including Bank of America Corp. and Citigroup Inc., which struggled with the tests in early years, to put about $30 billion more cash in shareholders' pockets, according to analysts' estimates.
Wells Fargo & Co. is the wild card, the one U.S. bank that might fail the qualitative section, analysts at Morgan Stanley and UBS said in reports this month. The Fed could find the bank's control mechanisms insufficient in light of revelations last year that employees may have opened millions of accounts without customer authorization