The Fed’s stress capital buffer: relaxed but not relaxing

Bankers welcome key methodology improvement, but final rule could still curb dividends

Despite a string of speeches from US Federal Reserve governor Randal Quarles trailing its release in recent months, the final rule on the stress capital buffer (SCB) published on March 4 was still something of a nail-biter for banks.

Top of their list of fears was the cliff effect that was present under the original stress capital buffer proposal in April 2018, which would have prevented banks from making any dividend distributions if they fell below their institution-specific buffer and had

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