US bank investors hope Fed stress test results lead to big payouts

Reuters Published on Mon, Jun 19, 2017 / 3:27 PM GMT+8

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(June 19): Investors are hoping the Federal Reserve will allow big US banks to put an estimated US$150 billion ($208 billion) in idle capital toward stock buybacks, dividends and profit-boosting investments in the coming weeks after conducting a regular examination of financial strength.

On Thursday, the Fed is scheduled to begin releasing results from its two-part annual stress test, which was adopted in response to the financial crisis, to gauge banks' ability to weather an economic storm that could threaten the stability of the system. The results will be the first since Republican President Donald Trump took office.

Trump has not yet made any appointments to the Fed, but Republicans have turned up pressure on the central bank to cut red tape and ease regulations. Wall Street analysts said they will be parsing language the Fed uses in presenting the results for any signs that its approach is starting to soften.