U.S. Federal Reserve approves JPMorgan, Goldman Sachs capital plans

Nathan Andrada – Fourth Estate Cooperative Contributor

Washington, DC, United States (4E) – The U.S. Federal Reserve approved the capital plans that JPMorgan Chase and Goldman Sachs Group Inc. were required to resubmit after “weaknesses” were found by the regulator in their procedures during this year’s stress tests.

The Fed gave the green light to plans by JPMorgan and Goldman to move ahead with share buybacks and dividends, after it found enough problems in both banks, prompting them to resubmit the proposals in the third quarter.

No reason was indicated by the Fed why it asked JPMorgan and Goldman to resubmit their plans, but it looks into the strength of a bank’s capital planning process and how a firm can meet new Basel III capital regulatory requirements.

Banks are required by the central bank to undergo tests each year to show that they have the ability to withstand a severe economic crisis. The results will then become the gauge whether a firm can buy back stock or increase dividend payments to shareholders.

In March, the Fed blocked plans submitted by Ally Financial Inc. and BB&T Corp. In previous years, the regulator also denied capital requests made by Bank of America Corp. and Citigroup Inc.

The Fed started fresh round of stress tests in November and plans to publish results in March 2014.

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