Fed to release results of bank stress tests

[steve2470]

http://www.washingtonpost.com/business/economy/fed-to-release-results-of-bank-stress-tests/2012/03/12/gIQAt0VI8R_story.html


The Federal Reserve said Monday it will release its findings this week on how the country’s biggest banks would fare under a nightmare economic scenario.

The latest round of stress tests examine whether the banks could withstand a crisis in which unemployment hits 13 percent, stocks fall by half, and housing prices drop 21 percent. Banks that are deemed healthy enough would be allowed by regulators to raise dividends for shareholders or buy back shares — both of which can boost their stock prices. Those that don’t pass the test would have to raise their capital levels and face serious questions from shareholders. The results will be out Thursday afternoon.

More than three years after the financial meltdown, the Fed is under pressure to prove it can monitor the banks and prevent a repeat crisis. At the same time, bank executives like Jamie Dimon of J.P. Morgan Chase are agitating for the Fed to loosen capital requirements on healthy banks so they can return more capital to investors.

Compared with past stress tests, said former Federal Deposit Insurance Corp. chair Sheila C. Bair, “the process is evolving and it’s getting better .?.?. the stress scenarios are much more severe than they have been in years past.”