| WASHINGTON, June 25
WASHINGTON, June 25 The U.S. Federal Reserve
will continue to add new elements to its annual check-up of the
health of banks, Governor Daniel Tarullo said in a speech on
Wednesday, to keep up with change in the financial sector.
The Fed might for instance look closer at the risk of common
exposures among firms in the annual model run known as 'stress
tests', which Tarullo defended as the core element of the Fed's
oversight of the banking sector.
"I expect that we will devote more attention to developing
the macroprudential elements of the stress tests," Tarullo said
in the text of a speech he was due to make in Boston.
Another idea would be to test whether there could be
knock-on effects from banks that started rapidly selling assets
during a crisis. Another was to see whether banks would still
have access to credit in times of stress.
The Fed requires banks to submit capital plans that show
what would happen to their finances under adverse economic
scenarios, and can stop the banks from raising dividends if it
deems the plans insufficient.
This year it rejected plans by Citigroup to buy back
$6.4 billion of shares and boost dividends, and also objected to
plans from the U.S. units of three European banks: HSBC
, RBS and Santander.
(Reporting by Douwe Miedema; Editing by Chizu Nomiyama)