X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.

WASHINGTON, DC—Depending on how you look at the results, the Federal Reserve's release in mid-March of its annual stress test on the leading 19 US banks either shows that safeguards put in place since the economic downturn are working, or that the government is far too stringent in its methodology. The latter claim comes from the four banks—New York City-based Citi and MetLife, Atlanta-based SunTrust and Detroit-based Ally Financial—that were deemed by the Fed to have failed the Comprehensive Capital Analysis and Review test.

Granted, the Fed said in a statement that the stress test scenario estimates “are the outcome of deliberately stringent and conservative estimates under hypothetical, adverse conditions.” The scenario, enacted to see if the banks could handle another crash in the market, included a peak unemployment rate of 13%, a 50% drop in equity prices and a 21% decline in housing prices. “Strong capital levels are critical to ensuring that banking organizations have the ability to lend and to continue to meet their financial obligations, even in times of economic difficulty,” the Fed said.

Want to continue reading?
Become a Free ALM Digital Reader.

Once you are an ALM digital member, you’ll receive:

  • Unlimited access to GlobeSt and other free ALM publications
  • Access to 15 years of GlobeSt archives
  • Your choice of GlobeSt digital newsletters and over 70 others from popular sister publications
  • 1 free article* every 30 days across the ALM subscription network
  • Exclusive discounts on ALM events and publications

*May exclude premium content
Already have an account?

GlobeSt

Join GlobeSt

Don't miss crucial news and insights you need to make informed commercial real estate decisions. Join GlobeSt.com now!

  • Free unlimited access to GlobeSt.com's trusted and independent team of experts who provide commercial real estate owners, investors, developers, brokers and finance professionals with comprehensive coverage, analysis and best practices necessary to innovate and build business.
  • Exclusive discounts on ALM and GlobeSt events.
  • Access to other award-winning ALM websites including ThinkAdvisor.com and Law.com.

Already have an account? Sign In Now
Join GlobeSt

Copyright © 2021 ALM Media Properties, LLC. All Rights Reserved.