Senator Warren asks big U.S. banks for details on pandemic performance
By Pete Schroeder
WASHINGTON (Reuters) - U.S. Senator Elizabeth Warren is asking major U.S. banks to disclose their performance in a recent Federal Reserve review of their finances during the coronavirus pandemic.
In a letter to 14 large companies on Wednesday, Warren urged everyone to submit their results from a confidential Fed test, arguing that the central bank's "limited transparency" about whether banks could weather a severe economic downturn was insufficient.
"The security and health of the banking sector cannot be taken for granted, and the American people deserve full transparency about the health of the financial system," the Democratic senator wrote in a letter from Reuters.
Warren added that the recent breakdown in negotiations on further economic stimulus makes matters more urgent, as the Fed previously stated that some banks' capital projections are "heavily dependent on additional economic support".
In June, the Fed announced that large banks could suffer losses of up to $ 700 billion in a severe pandemic-induced recession. However, the central bank only released these results as a whole as it was unable to conduct a full stress test for every bank due to the recent outbreak of the pandemic.
It was not disclosed how each bank performed under this hypothetical downturn, although it was warned that some companies saw their capital decline near the minimum level.
The Fed plans to conduct a second pandemic stress test by the end of 2020. From this point on it will be announced how each company has developed for itself.
But right now, Warren has asked 14 of the largest banks in the country to share their performance, and any concerns regulators may have raised about their capital planning.
Warren also asked banks for their own internal planning for a potentially severe downturn and how their capital buffers might fare under the prospect.
(Reporting by Pete Schroeder; Editing by David Gregorio)
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