Wells Fargo and Capital One may be forced to cut their dividends after the Federal Reserve stress test introduced a new rule governing the quarterly payouts, according to Morgan Stanley analyst Betsy Graseck. The Fed released the results of its annual bank exam Thursday, revealing new restrictions on the U.S. banking industry after it found that several banks could get close to minimum capital levels in scenarios tied to the coronavirus pandemic. That included a new formula for dividend payouts that dictates that a lender's dividend cannot exceed its average net income from the previous four quarters. Based on Graseck's estimates for second-quarter earnings, that means Wells Fargo would need to cut its third-quarter dividend to $0.36 from $0.51, and Capital One would have to slash it to zero, from its current $0.40, the bank analyst wrote Friday in a research report. Shares of Wells Fargo tumbled 4.4% shortly after the open of trading in New York, while Capital One fell 3.5%. "The Fed threw us a curve ball," Graseck said, adding that she now expects the regulator to "continue to be very hands on until the economy stabilizes." Banks are loathe to cut their dividend payments, which are seen as a steady source of income for investors. Doing so could ding confidence in management. The industry as a whole was forced to slash dividends after the 2008 financial crisis, and has slowly been building them higher since the Fed first allowed banks to raise dividends in 2011. Furthermore, Goldman Sachs will have to cut back on its holdings of risk-weighted assets in order to maintain its dividend, Graseck said. Doing so over the next two quarters will likely result in slower revenue growth, as the bank will have fewer assets throwing off interest, she said. Goldman shares declined 3.6%.