Wall Street wins OK for payouts worth billions in Fed stress tests

The largest U.S. banks are poised to return billions of dollars to investors after Federal Reserve stress tests showed planned dividends and stock buybacks wouldn’t leave them too weak to survive a harsh economic downturn.

Under the most severe test scenario, a recession with unemployment spiking to 10% and the Dow Jones Industrial Average falling by more than 50% to about 12,800, evaluators projected that the banks examined this year would still have higher capital reserves than they did in early 2009, at the height of the financial crisis.