Morgan Stanley Asks Federal Reserve to Cut Capital Requirement

(Bloomberg) – Morgan Stanley asked the Federal Reserve to reduce capital requirements, and in line with the expectations of lenders, the regulator explained that he announced the upcoming capital requirements for most Wall Street Bank.

The Federal Reserve said in a statement on Friday, “The firm wanted to re -evaluate to reduce this requirement.” He said. “The Board reviews the company’s demand for reducing stress capital buffer requirement” and plans to make a decision until September 30th.

The announcement of the Central Bank officially completes the annual stress test exercise, which is a multi -stage process that evaluates how the country’s largest loans will perform under hypothetical economic conditions. The total common shareholder layer updated for each company that will enter into force on 1 October results in a capital ratio requirement.

A total of 22 banks, including Morgan Stanley, took the Fed stress test that determined that they could damage more than $ 550 billion this year and passed easily. Capital requirements related to this test on Friday consist of various components, including the same-and stress capital buffer requirement for each company. The largest loans or global systemic bankic banks are also subject to the additional fee of capital.

The FED’s announcement comes because it expects the results of the industry’s planned changes in the stress test process of the FED. In April, the agency submitted an offer for average results for two years while determining capital requirements. Fed’s Vice President of the FED Michelle Bowman said that potential changes would help the agency’s “excessive volatility in stress test results and corresponding capital requirements”.

“The individual capital requirements described today represent a transition period, Bow Bowman said that the finalization of the April plan would be an important step to reduce volatility in bank capital requirements compared to last year.

The FED also explained plans to reduce the advanced additional leverage ratio that requires banks to hold a certain amount of capital according to their assets. The regulator will also take action to propose a new risk -based capital plan advocated by Wall Street.

There are more stories like this Bloomberg.com