Major Banks Consider Legal Action Against Federal Reserve Over Stress Tests

According to Odaily, several major banks are reportedly planning to sue the Federal Reserve over its annual bank stress tests. An insider revealed that the lawsuit is expected to be filed this week, possibly as early as Tuesday morning local time. The Federal Reserve's stress tests are an annual requirement that mandates banks to maintain sufficient capital buffers for bad loans and sets limits on stock buybacks and dividends. After the market closed on Monday, the Federal Reserve announced plans to adjust the bank stress tests but did not provide specific details about the changes to the annual framework. These adjustments may not alleviate concerns among banks regarding stringent capital requirements, as the Federal Reserve stated, "These proposed adjustments are not intended to have a material impact on overall capital requirements." Greg Baer, CEO of the Bank Policy Institute (BPI), which represents major banks like JPMorgan Chase, Citigroup, and Goldman Sachs, welcomed the Federal Reserve's statement. He described it as a first step towards transparency and accountability. However, Baer also hinted at the possibility of further actions, stating, "We are carefully reviewing this statement and considering additional measures to ensure timely reforms that are both legally and policy compliant."