WASHINGTON, March 14 The Federal Reserve said on
Thursday it had rejected plans by BB&T Corp and Ally
Financial to return capital to shareholders, and is forcing
Goldman Sachs and JPMorgan & Chase to improve the
processes they use to determine their capital payouts.
The results are the second phase of the Fed's annual stress
tests of the 18 largest U.S. banks, and show that the Fed is
still closely scrutinizing banks' funding cushions nearly five
years after the peak of the financial crisis.
The Fed said it approved the other 14 banks' plans for
dividends and share repurchases, although American Express
had to submit an adjusted capital plan after the Fed
determined its first proposal would have eroded its capital
position too much.
Goldman Sachs and JPMorgan received conditional approval for
their capital payouts.
The Fed did not provide a breakdown of each bank's plans for
dividends and repurchases. Later on Thursday, individual banks
are likely to disclose those details themselves.
Thursday's results follow the Fed's release last week of the
banks' capital strength without their planned capital
distributions. The Fed said major U.S. banks overall had enough
capital to withstand a severe economic downturn.
Ally Financial was the only bank last week that failed to
meet the minimum hurdle of a 5 percent capital buffer in the
Fed's "stress test" that assumed a spike in unemployment to 12.1
percent and a 50 percent drop in share prices.
The U.S. government owns a majority stake in Ally, the
former General Motors lending arm, after a series of
The Fed said on Thursday that it rejected Ally's capital
plan "both on quantitative and qualitative grounds."
While BB&T passed last week's test with a 9.4 percent
capital buffer, one of the highest capital scores of the 18
banks, the Fed said its capital plan was rejected "based on a
The Fed did not immediately provide a further explanation.
For Goldman Sachs and JPMorgan, the Fed said it did not
object to either of their capital plans.
However, the Fed said it found "weaknesses in its capital
plan or capital planning process that were significant enough to
require immediate attention, even though those weaknesses do not
undermine the quantitative results of the stress tests."
It did not specify the weaknesses.
The Fed granted conditional approval to Goldman and JPMorgan
and is forcing them immediately fix the problems and then
resubmit a capital plan by the end of the third quarter of this
The Fed also said on Thursday that it had confirmed an error
in Goldman's initial data submission. The Fed released a
corrected version of the stress-test results, which showed lower
projected capital ratios for Goldman.
The revisions and public rebuke could be an embarrassment
for Goldman, whose stress-test results were already among the
weakest of the 18 big banks.