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Fed To Release Annual Stress Tests Of Bank Capital In Two Steps

Wednesday, March 6, 2013 - 7:32 AM
From Reuters
Late on Thursday, the agency is expected to reveal how much capital 18 large banks would maintain under a hypothetical severe economic downturn. A week later, the Fed plans to disclose how the banks would have fared if they had first spent some of their capital buying back shares or paying higher dividends.

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Ken TuminKen Tumin5,473 posts since
Nov 29, 2009
Rep Points: 125,800
1. Thursday, March 7, 2013 - 4:41 PM
From MarketWatch:
The first part of a long-awaited two-stage stress test for big banks is in and all but one stayed above minimum financial ratios set out in the test.

That’s according to initial Federal Reserve results released Thursday, seeking to find out if 18 of the largest financial institutions could withstand a deep recession like the credit crunch of 2008.

Ally Financial Inc., majority owned by the government, was the only bank that failed to meet one of the key ratios. The test showed that Ally had 1.5% in capital set aside under a measure known as Tier 1 common ratio, which compares the bank’s common equity to its risk-weighted assets. That is significantly below the generally accepted standard of 5%. The other 17 institutions fared better, but many experienced major mortgage, securities and loan losses under the recession scenario.

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pearlbrownpearlbrown1,491 posts since
Nov 2, 2010
Rep Points: 6,490
2. Thursday, March 7, 2013 - 5:05 PM
Some economists and bank regulators think the stress tests may be missing a key vulnerability for banks -- their derivatives.

The Fed's stress test may not be stressful enough - The Term Sheet: Fortune's deals blogTerm Sheet
ShorebreakShorebreak2,700 posts since
Apr 6, 2010
Rep Points: 14,636