Bank Stress Test Results In
Tuesday, March 13, 2012
The Federal Reserve released the results of “stress tests” for 19 financial institutions Tuesday — two days ahead of schedule — after J.P. Morgan Chase announced it successfully passed the test and was boosting dividends.
“It seems pretty obvious that J.P. Morgan pre-empted the Fed and released news that was very pleasing to its investors and gave the stock a bump,” said Joe Nocera, a columnist for The New York Times and a contributor to WNYC, adding that he expects Fed Chairman Ben Bernanke “isn’t too happy” with J.P. Morgan CEO Jamie Dimon right about now.
The stress test examined what would happen to a bank’s balance sheets if unemployment rose to 13 percent, stock prices were cut in half and home prices fell 21 percent from today's levels.
The Fed said 15 of the19 major banks passed the test and that all 19 banks are in a much stronger position than immediately after the 2008 financial crisis.
Citigroup, SunTrust, Ally Financial and MetLife failed to meet the test's minimum capital requirements.
“In Citi’s case, it’s going to have to raise capital to be able to issue a decent dividend… or buy back its own stock,” Nocera said.