Fed Tells Banks: We Want To Test You Every Year And Review Your Dividend Policy

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The Federal Reserve is set to announce a plan that will force The U.S.’s 35 biggest banks to undergo annual stress tests, according to CNBC.

The Fed plans to test all banks with $50 billion in assets or more, according to Bloomberg.

The biggest worry here for banks would be the Fed’s plan to get oversight of any “capital distributions” by the banks. That means all dividends are up for review, if this plan comes to fruition.

From the Fed:

The Federal Reserve would evaluate institutions’ plans to make capital distributions, such as increasing dividend payments or repurchasing or redeeming stock, as part of the capital plan reviews. In some cases, such as when institutions’ capital plans have been rejected by the Federal Reserve, firms would be required to receive approval from the Federal Reserve before making capital distributions.

Financial stocks were already big losers today, but now the industry’s biggest names are under further pressure. The SPDR Financial Sector ETF is now down 1.74%. Bank of America shares are down nearly 2.00%, while Citigroup shares are down over 2.00%.

Read the Fed’s full release here >

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