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Fed announces new capital levels for large banks, says Morgan Stanley appealing result

BY Reuters | ECONOMIC | 08/29/25 04:00 PM EDT

WASHINGTON, Aug 29 (Reuters) - The U.S. Federal Reserve announced Friday it had finalized new capital levels of the nation's largest banks following the June stress tests, although it added that Morgan Stanley (MS) is seeking reconsideration of its upcoming capital level. The central bank added that the new capital requirements, which take effect on Oct. 1, would be updated should the Fed adopt a pending proposal to average the results of two years of stress tests. Under the annual stress test of large bank finances, the Fed examines how banks would perform under a hypothetical economic downturn, and sets their capital cushions in line with how severe their losses would be. Morgan Stanley (MS) is requesting reconsideration of its result, and the Fed will announce its decision by the end of September. (Reporting by Pete Schroeder, Editing by Franklin Paul)

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In general the bond market is volatile, and fixed income securities carry interest rate risk. (As interest rates rise, bond prices usually fall, and vice versa. This effect is usually more pronounced for longer-term securities.) Fixed income securities also carry inflation risk and credit and default risks for both issuers and counterparties. Unlike individual bonds, most bond funds do not have a maturity date, so avoiding losses caused by price volatility by holding them until maturity is not possible.

Lower-quality debt securities generally offer higher yields, but also involve greater risk of default or price changes due to potential changes in the credit quality of the issuer. Any fixed income security sold or redeemed prior to maturity may be subject to loss.

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