To: Keith Feral who wrote (44685 ) 1/28/2013 7:54:58 PM From: Brian Sullivan Respond to of 222675 Bank 'Stress Tests' to Be Released Over 2 Days in March WASHINGTON—The Federal Reserve said Monday that it will release the results of the latest "stress tests" for the nation's 19 largest banks over two separate days in March. By saying when and how it will disclose the results, the Fed is seeking to avoid a replay of the confusion that accompanied last year's results, when some banks complained of miscommunication with the central bank. At the same time, the two-stage release could heighten market speculation over the fate of lower-scoring banks. The Fed said it will release on March 7 scores assessing how banks would hold up under deteriorating economic and financial-market conditions. On March 14, the Fed will reveal whether the 19 banks will be permitted to repurchase stock or pay dividends. Last year's release of results was thrown into disarray when the Fed moved up its announcement by two days, and J.P. Morgan Chase JPM -1.10% & Co. disclosed publicly that it had passed the stress tests before the Fed made its announcement. Separating the release of stress-test results from the decision on banks' capital plans allows Fed officials to spotlight the broader assessment of how vulnerable the industry is to potential shocks. Officials also hope changes they have made to the testing process will eliminate some of the tensions with banks that have been in place since regulators first insisted on the tests in the wake of the 2008 financial crisis. Unlike previous years, banks whose dividend or share-buyback plans would cause them to fail the central bank's test will essentially be allowed a mulligan, giving them the chance to pare back or alter their plan to meet Fed thresholds before the official results are released. That could help prevent a situation where the Fed's rejection of a major bank's capital plan becomes public, as it did for Bank of America Corp. BAC -1.20% in 2011 and Citigroup Inc. C -1.33% last year. "The banks won't have to go through the same stress that they did previously," said Sabeth Siddique, a director at consulting firm Deloitte & Touche who was part of the Fed team that conducted the first round of stress tests in 2009. "The opportunity for banks to tailor their plans will avoid those negative announcements from the regulators." Banks still must be careful in how they approach the capital-plan process, said Jaret Seiberg, an analyst at Guggenheim Securities. While firms will be allowed to revise their requests for share buybacks or dividends, there is still a risk of not meeting regulators' expectations.