CCAR: The journey continues

The Federal Reserve (“Fed”) released the results of its Comprehensive Capital Analysis and Review (CCAR) for 2016 on June 29.  Some key facts:

  • Fed noted objections to two firms out of thirty-three (Deutsche Bank and Santander) and required resubmission for one (Morgan Stanley)
  • All objections and resubmissions were driven by Fed-cited weaknesses around qualitative issues
  • No firm failed to meet post-stress capital minimums, and compared to four the previous year, only one firm (M&T) needed to scale back its capital distribution request to do so, taking a so-called “mulligan”

The prior week’s release of the Dodd-Frank Act Stress Test (DFAST) results provided more detailed information on the Fed’s stress test.  Compared to CCAR, those results exclude buybacks and capital issuances and hold past common dividends constant.

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