Of the 34 banks that were required to undergo the most recent stress tests, Ally Financial Inc (ALLY.N) and KeyCorp (KEY.N) were the only two lenders to show common equity Tier 1 capital ratios below 7 percent.
The Federal Reserve says all of the country's big banks passed this year's stress test, in which regulators create a scenario where unemployment surges and banks lose hundreds of billions of dollars in loans. It's far above the 4.5 percent minimum capital level and the 5.5 percent that the banks held at the start of 2009, soon after the crisis hit, the year the first stress tests were performed.
The results released on Thursday are the first of a two-part exam.
"I don't think what we are talking about here amounts to deregulation", said Federal Reserve Governor Jerome Powell, the central bank's regulatory point man.
All the banks can now amend their plans on dividend payments and stock buybacks to win Fed approval before it announces its decisions on those issues next Wednesday.
"Today's results reaffirm that USA banks are strong and remain well positioned to continue playing their important role in accelerating economic growth", the group said.
For the third year in a row, all the banks maintained capital levels above the minimum the Fed requires. The banks undergoing the seventh annual check-up included JPMorgan Chase & Co., Bank of America Corp., Citigroup Inc. and Wells Fargo and Co. - the four biggest US banks by assets.
Goldman Sachs Group's projected loan-loss rate of 8.1 per cent was surpassed only by commercial lenders or card issuers such as American Express, Capital One Financial Corp, and Discover Financial Services. "The reason we need to reform ourselves is because we believe in an independent central bank subject to the oversight of Congress and the selection of the president". The regulators said that, although there have been improvements, the banks continue to show weaknesses in supervision that could harm their capital planning. The president also will be able to appoint a new Fed chair when Janet Yellen's term expires in February.
The Dodd-Frank Act stress tests are one component of the Federal Reserve's analysis during the Comprehensive Capital Analysis and Review (CCAR), which is an annual exercise to evaluate the capital planning processes and capital adequacy of large bank holding companies. With the Dodd-Frank results in hand, now banks have the option of revising their capital plans before CCAR is released.
"If the Fed bets wrong and treats one particular trading strategy as low risk and it's high risk, all the banks will have taken that low-risk bet and it will have turned out very badly", she said.