Citigroup and 3 Other Banks Can’t Take the Stress
Posted on Mar 13, 2012
Despite hefty bailouts and infinitesimal interest rates, Citi, Ally Financial, MetLife and SunTrust were not able to pass the latest round of stress tests designed and measured by the Federal Reserve.
The BBC describes the criteria:
The Fed tested the banks’ ability to withstand a crisis that triggered a rise in unemployment to 13%, a 50% fall in share prices and a 21% drop in house prices from current levels.
Their strength is assessed by the amount of “buffer” best-quality assets, known as Tier 1 capital, they would hold if such conditions occurred.
The banks with the highest rating, reports the Beeb, were American Express, Bank of New York Mellon, and State Street.
The Fed released the results early after JP Morgan Chase started bragging that it had passed despite gobbling up the remains of some of the financial crisis’ most troubled institutions, including Bear Stearns and Washington Mutual. —PZS
Jon Wade (CC-BY)