Bank of America's stressed scenario plan approved

Bank of America has had its re-submitted plan for a stressed scenario approved by Federal Reserve, in what represented a key moment for the the bank's CEO, Brian Moynihan, with some having suggested that if the bank's plan had been rejected then his job would have been on the line. Regulators warned that although the bank still has work to do, it has made ground in dealing with concerns over fixing loss and revenue models for the Comprehensive Capital Analysis & Review (CCAR). The bank shares rose 0.8% in reponse the good news.

The Federal Reserve Board on Thursday announced that it has not objected to the resubmitted capital plan from the Bank of America Corporation.

The Board in March required Bank of America to resubmit its capital plan to address certain deficiencies in its capital planning processes, following the review of the firm's capital plan in the Board's Comprehensive Capital Analysis and Review (CCAR). Those deficiencies included weaknesses in aspects of the firm's loss and revenue modeling practices and its internal controls. Bank of America has made progress in remediating the identified deficiencies in its capital planning processes.

In communicating its decision to Bank of America, the Federal Reserve indicated that the firm must continue to make steady, demonstrable progress prior to the 2016 CCAR cycle toward establishing and maintaining sound risk-management and capital-planning processes that are commensurate with the size and complexity of its operations and systemic importance.

CCAR evaluates the capital planning processes and capital adequacy of the largest U.S.-based bank holding companies, including the firms' planned capital actions such as dividend payments and share buybacks and issuances. Strong capital levels act as a cushion to absorb losses and help ensure that banking organizations have the ability to lend to households and businesses even in times of stress.