Banks Fear Failing Stress Tests, Says Sandler’s Siefers

There’s a fear in the financial industry that U.S. regulators intend each year to make an example of a handful of banks by rejecting their stress tests, said Scott Siefers, a research managing director at Sandler O’Neill & Partners LP.

“In discussions with clients and other analysts, I’d say there’s certainly a fear that every year there will be this possibility that — rightly or wrongly — at least someone won’t pass,” Siefers said in an interview about the Federal Reserve accepting Fifth Third Bancorp’s resubmitted capital plan. When the bank earlier this year submitted its stress test the Fed rejected its request to buy back stock and raise the dividend.

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