Fed Sets Capital Buffers for Large Banks

By Pete Schroeder

WASHINGTON (Reuters) – The U.S. Federal Reserve announced on Wednesday the latest capital cushions for large banks following June’s annual stress tests, but agreed to reduce Goldman Sachs’ burden.

The new levels, effective Oct. 1, primarily reflect those the Fed initially identified as part of its annual assessment of large banks.

However, the central bank noted that it had lowered the additional capital level for Goldman Sachs after the firm requested a reconsideration. The bank’s required “stress capital buffer” is now 6.2%, down from the previously suggested 6.4%.

The Fed stated it accepted the change after receiving more information from Goldman, indicating it was appropriate to adjust the treatment of some nonrecurring historical expenses under the exam.

In a statement following the results, Goldman CEO David Solomon mentioned plans to discuss the findings with the Fed.

“We appreciate the Federal Reserve’s willingness to reconsider this matter,” said Goldman Sachs’ Chief Financial Officer Denis Coleman after the results were released.

“We will continue to engage with our regulator to better understand their determinations and advocate for a more transparent process.”

Additionally, the Fed indicated it would consider modifying how banks report data to enhance its collection, as well as potential refinements to its internal stress test models.