By Pete Schroeder
WASHINGTON (Reuters) - U.S. Senator Elizabeth Warren is asking large U.S. banks to disclose how they performed under a recent Federal Reserve exam of their finances during the coronavirus pandemic.
In a letter sent to 14 large firms Wednesday, Warren asked each to provide its results from a confidential Fed test, arguing the central bank's "limited transparency" on whether banks could weather a severe economic downturn is insufficient.
"The safety and soundness of the banking sector cannot be taken for granted, and the American people deserve full transparency regarding the health of the financial system," the Democratic senator wrote in a letter seen by Reuters.
Warren added that the recent collapse of negotiations for further economic stimulus makes the matter more pressing, as the Fed previously noted that some banks' capital forecasts were "strongly dependent" on additional economic support.
In June, the Fed announced that large banks could suffer as much as $700 billion in losses under a severe pandemic-driven recession. But the central bank only released those results in aggregate, citing the fact that the recent onset of the pandemic prevented it from conducting a full-blown stress test of each bank.
It did not disclose how each bank performed under that hypothetical downturn, although it did warn that some firms saw their capital fall near minimum required levels.
The Fed plans to conduct a second pandemic stress test by the end of 2020, at which point it will reveal how each firm performed on its own.
But for now, Warren has asked 14 of the nation's largest banks to tell her how they performed, and any concerns regulators may have raised about their capital planning.
Warren also asked the banks for their own internal planning for a potentially severe downturn, and how their capital cushions may be impacted under those outlooks.