Stress tests less severe, predicts Morgan Stanley Chief – Oct 17th 2018

U.S. Federal Reserve stress tests have probably reached the “high water mark” in difficulty and future reviews will be less challenging, said Morgan Stanley chief executive officer James Gorman on Tuesday. The firm reported strong earnings that will help the bank in its struggle to win full Fed approval for its capital plan. Morgan Stanley and its investment banking rival, Goldman Sachs, failed the Fed’s stress test in June, while all of the U.S. commercial banks subject to stress testing were approved. The Fed gave the investment banks conditional approval after they resubmitted their plans. The two firms were required to keep capital distributions unchanged until they meet the Fed’s capital requirements. Morgan Stanley has been a vocal critic of the way the Fed carried out its stress tests, known as the Comprehensive Capital Analysis and Review.
Richard Satran, Complinet