Can the big banks survive another economic situation like the crisis of late 2008? That’s what federal reserve regulators want to find out. They had more than 30 banks participate in new stress tests after the close of business on Tuesday last week. These are the largest banks in the country, all with assets of $50 billion or more.
The banks are expected to have plans in place for how to have or arrange for sufficient capital to survive a major shock. More specifically regulators will look at whether the banks will be able to continue consumer and business lending even when facing a crisis situation. But the biggest of the big will be tested even more severely. According to an article on CNN.com;
Six banks with large trading operations will have an even higher hurdle to clear, simulating a more severe global financial meltdown. Those banks are Bank of America, Goldman Sachs, Citigroup, JPMorgan Chase, Morgan Stanley and Wells Fargo.
…The Fed issued specific instructions that vary depending on the size and operations of each company.
In stress tests the Fed began conducting in 2009, only 19 banks — those with $100 billion or more in assets — were required to participate. But now Dodd-Frank regulations require annual testing of banks with more than $50 billion.
Unfortunately for those of us who would like to know, the results of these new bank stress tests are not yet available to the news media (and probably will not be made public if there are any serious problems).
