Fix to Fed stress test snafu lowers two banks’ capital charges
Goldman, Morgan Stanley see stress capital buffer cuts
Goldman Sachs and Morgan Stanley had their binding capital requirements lowered on Friday (September 4) after the Federal Reserve admitted it fouled-up their stress test results.
The agency said it botched the projected loss rates for certain “public welfare investments”, an error that inflated projected losses at five of the 11 banks subject to the global market shock component of this year’s Dodd-Frank Act Stress Tests (DFAST): Citi, HSBC North America, Goldman Sachs, Morgan Stanley and Wells
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