The Federal Reserve may veto dividend payouts for U.S. banks that do not pass annual stress tests, the Financial Times reported on Wednesday.
A draft of the new rule is expected to be approved by the Federal Reserve Board and put out for public comment within weeks, the newspaper said.
Bank executives have begun discussing the proposal with Fed officials, the FT reported.
Regulators, including the Fed, have come under harsh criticism for failing to spot risky lending and securities packaging practices viewed as contributing substantially to a financial meltdown that led to a deep recession in 2007-2009.
Federal Reserve Chairman Ben Bernanke said earlier this month that the U.S. central bank had not yet decided how much bank-specific information it would release from new yearly bank stress tests mandated by the Dodd-Frank Act.
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