Bank of America Corp. has the capital to keep lending in a severe economic downturn, the Federal Reserve calculated Thursday in the first stage of its annual stress tests. At the low point of a hypothetical recession, Bank of America’s common equity Tier 1 ratio, which is a measure of high-quality capital as a share of risk-weighted assets, was 8.1%, exceeding the 4.5% level the Fed views as a minimum, the central bank estimated....
Amid its stress tests, the Federal Reserve has announced that Bank of America has enough capital to continue lending during times of severe economic downturn. The bank's common equity Tier 1 ratio exceeded the minimum 2.4% by reaching 8.1% while its Tier 1 leverage ratio reached 8.1% , 2.4% higher than the minimum requirement. If Bank of America continue to make steady progress, the US Federal Reserve may approve its plans to reward shareholders with potential share buybacks and dividends.