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After passing all 33 banks in the first round of stress tests, the Fed wasn't so lenient the second time around—the latest test indicated three banks have serious work to do.
The Fed took issue with the capital plans of Deutsche Bank and Santander, saying both have more to do in terms of shoring up reserves and building effective risk management systems, USA Today reports. The other offender was Morgan Stanley, the only major US bank to be called out.
While initially accepting Morgan Stanley’s capital plan, the Fed is forcing the bank to resubmit its plans by Q4 of this year to “address weakness in its capital planning process.” [USA Today]
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