Wells Fargo Sailed Through Its Stress Test. Goldman Sachs and Morgan Stanley, Not So Much.

Tests produce winners and losers. The one that the government imposed on the nation’s biggest banks this week was no exception.

The Federal Reserve on Thursday released results of the second round of its annual stress tests, which assess whether large banks have enough capital to make it through an economic crisis, and whether they have the systems and plans in place to deal with the related upheaval. When banks fail the tests, the Fed may limit how much money they can pay out to shareholders or, in the case of the U.S. operations of foreign banks, how much they can pay to their parent companies.

The Fed said last week in the first round that all of the 35 banks it tested had sufficient capital to absorb the losses that might occur in the hypothetical crisis. Because banks are earning big profits right now, the first round of stress tests raised hopes that banks would be allowed to pay out most of those profits to shareholders when the test turned Thursday to their operational capabilities.

The Fed objected only to the capital payouts of a U.S. entity belonging to Germany’s Deutsche Bank, which includes its large Wall Street operations. Goldman Sachs and Morgan Stanley did not fail Thursday, but their pass came with restrictions.

Here, DealBook takes a closer look at how the tests played out.

The limit on payouts carries a stigma, but it could have been worse. Morgan Stanley’s planned $6.8 billion distribution to shareholders after this year’s stress test is close to what it planned after last year’s. Goldman’s planned payout for this year, $6.3 billion, is lower than last year’s request of around $9.9 billion. But it’s important to note that Goldman has only paid out roughly $5.7 billion of last year’s sum.

One reason the Fed did not object to the two firms’ capital plans is that, although their payouts would have taken their capital below minimum requirements in the stress tests, there were mitigating circumstances. The two banks’ results were negatively affected by the recent tax bill enacted by Congress. Adapting to the new law, which meant doing things like repatriating money from abroad, caused losses at Morgan Stanley and Goldman Sachs that depleted their capital going into the stress tests. Because of the one-time nature of the losses, and the fact that the tax cuts will bolster earnings over time, the Fed did not object to the two banks’ plans.

Even so, it appears that Morgan Stanley had to reduce its plan by around $1.9 billion and Goldman Sachs by roughly $1.2 billion, according to calculations by The New York Times.

The giant German lender has had years to try to mend the problems affecting its U.S. businesses before they were subject to the Fed’s stress tests. But the Fed does not appear to be seeing sufficient improvement. On Thursday, it said it objected to the capital plan of Deutsche Bank’s U.S. entity, known as DB USA, because of “widespread and critical deficiencies across the firm’s capital planning practices.”

In a statement, Deutsche Bank said Thursday that DB USA had “made significant investments to improve its capital planning capabilities as well as controls and infrastructure.”