Bank Stress Tests May Also Test Stockholders
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The offices of Citibank, Bank of America and HSBC in the Canary Wharf financial district of London. The Federal Reserve said last week that the 33 largest financial institutions in the United States would survive a simulated recession relatively well.CreditOdd Andersen/Agence France-Presse — Getty Images
Bank stress exams may test investor patience.
On Wednesday, the Federal Reserve is scheduled to report how 33 financial institutions fared in a simulated bad economic downturn. Countercyclical factors included this year could mean that even those banks that ace the tests will have to hang on to additional profit rather than return more money to shareholders.
The Federal Reserve has emphasized the improving resilience of the financial sector. In the first round of results released last week, all banks proved tough enough from a capital perspective to keep lending despite a situation in which gross domestic product fell 7.5 percent. That’s because banks have added more than $700 billion of common equity cushioning since 2009…
Bank Stress Tests May Also Test Stockholders
