NEW YORK — JPMorgan Chase and Goldman Sachs need better plans for coping with a severe recession, the Federal Reserve said Thursday, giving the banks until September to revise them.
The announcement came as part of the Fed’s so-called “stress tests,” its annual check-up of 18 of the country’s big banks. The government runs the tests to see how the banks would fare in a severe recession. As a result of the tests, it also tells each bank whether it’s allowed to raise its dividend, the quarterly payout it gives to stockholders, or buy back more of its own shares.
The Fed said that JPMorgan and Goldman were allowed to start any dividend increases or share buybacks they may have asked for.
That privilege would be withdrawn only if they didn’t submit new capital plans that satisfy the Fed.
Ally Financial and BB&T Corp. fared worse: The Fed forbade them from going through with any dividend increases and share buybacks they may have asked for.
But overall, the Fed approved requests outright from 14 of the 18 banks it was examining, including Citigroup, Wells Fargo, Morgan Stanley and Bank of America.
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