Fed: Biggest US banks strong enough to withstand recession

Morgan Stanley Barclays Goldman Sachs JPMorgan Credit Suisse Citigroup and Bank of A

In the first part of its annual tests, the Fed said 34 of the largest US banks have significantly bolstered their defenses since the 2008 crisis.

Even after being pounded by a severe economic downturn, banks collectively had a 9.2% capital buffer, staying well above the Fed's minimum of 4.5%.

The Fed said that the banks would collectively lose almost half a trillion dollars in its most extreme scenario but they would still be able to lend money.

Even Federal Deposit Insurance Corporation Chairman Martin Gruenberg, the sole holdover from Trump's Democratic predecessor, Barack Obama, said he was open to some small revisions.

The tested banks included Bank of America, JP Morgan Chase, Wells Fargo, Morgan Chase and the Deutsche Bank Trust Corp, a United States unit of the troubled German financial giant.

"Today's results reaffirm that USA banks are strong and remain well positioned to continue playing their important role in accelerating economic growth", said ABA President and CEO Rob Nichols.

Today's results were the first under President Donald Trump, who aims to relax capital regulations and encourage banks to lend more. Those banks represent about 75 percent of all USA assets.

The more closely watched day by investors will come next Wednesday, when the Fed tells banks whether they showed good enough judgment this year to buy back stock or pay dividends to shareholders.

Draymond Green cracks LeBron James bald joke on Instagram
Russell Westbrook , who is famously not a huge fan of the Warriors, appears to have liked LeBron's post playfully dissing Green. The Warriors' 2017 championship parade took place on Thursday, and Green jabbed the Cavs with sly sartorial choice.

Banks will get the chance to revise their capital plans before next week's results are released.

Regulators were looking for two key pieces of information.

The Fed has changed the emphasis in stress scenarios from year-to-year to keep banks from managing their portfolios to the test.

The second phase is an annual Fed exercise that evaluates the banks' capital planning processes and capital adequacy. "They just can't get any money because the banks just won't let them borrow it because of the rules and regulations in Dodd-Frank".

In the first round, under the tests' hypothetical "severely adverse" scenario, the USA would endure a catastrophic recession in which unemployment - now at 4.3 percent - reached at least 10 percent, home prices dropped 25 percent, the stock market plunged about 40 percent and market volatility rose sharply.

The Fed's assessment showed the other five largest banks - JPMorgan, Bank of America, Wells Fargo & Co (WFC.N), Goldman Sachs Group Inc (GS.N) and Morgan Stanley (MS.N) - having minimum CET1 ratios between 8.4 and 9.4 percent.

"If the Fed bets wrong and treats one particular trading strategy as low risk and it's high risk, all the banks will have taken that low-risk bet and it will have turned out very badly", she said. The president also will be able to appoint a new Fed chair when Janet Yellen's term expires in February.

Related News:

  • Empty NYC transit bus rolls down street, hits church, cars

    Empty NYC transit bus rolls down street, hits church, cars

    An empty bus rolled down a New York City block, striking several parked cars before crashing to a stop in front of a church. New York's PIX 11 news reports the bus hit at least six cars and caused thousands of dollars in damage.
    Nick Clooney shares excitement for new grandchildren

    Nick Clooney shares excitement for new grandchildren

    On Tuesday, Salma Hayek happily told People magazine that she is confident in the couple's ability to be great parents. I am very happy for them", adding that George and Amal will be "great parents".
    Kelly presses 'Infowars' host Jones on Sandy Hook denial

    Kelly presses 'Infowars' host Jones on Sandy Hook denial

    Kelly said Jones never completely disavowed his previous statements about the killings being a hoax. Jones leaked audio of his conversations with Kelly days before the broadcast.
  • Trump appears to confirm he's under investigation

    A spokesman for the Justice Department did not respond to an email request for clarification and comment Friday morning. After the statement, the Post updated the Kushner article so that its first sourcing reference was to "U.S. officials".

    Schiff says firing Mueller would echo Watergate

    Democratic senators on the committee attempted to clarify the boundaries of Sessions' recusal , something they say is unclear. The CEO is Newsmax Media called Mueller "illegitimate" as a special counsel because the investigation itself has no basis.

    Sheriff: Men seen in SC were likely not escaped Ga. inmates

    Putnam County Sheriff Howard Sills said the inmates fled from the bus near Eatonton, about 70 miles southeast of Atlanta. Monica had worked for the facility for almost eight years after being hired in October of 2009.
  • Apple announces watchOS 4, new iPad Pro

    Apple announces watchOS 4, new iPad Pro

    Back in March 2016, Apple made its first attempt to answer these queries with a new iOS update but still seem to miss the mark. There is a new iMessage App Drawer so that it is easier to find the apps you want while you are in an iMessage conversation.
    Republicans' Secret Healthcare Bill Is Being Protested By Democrats In Senate

    Republicans' Secret Healthcare Bill Is Being Protested By Democrats In Senate

    Meanwhile, a Fourth of July recess deadline looms for Republicans to vote on a healthcare proposal. McConnell's office did not respond to a request for comment over his fundraising schedule.
    Family: Oakland County native wounded in congressional baseball shooting in critical condition

    Family: Oakland County native wounded in congressional baseball shooting in critical condition

    Mika, of Oakland County, is the current director of government relations at Tyson Foods and was at the practice Wednesday morning. The family said , "he is lucky to be alive" and credited the care he has received and "Matt's fighting spirit and grit".
  • 198 million United States voter identities may have exposed in massive security breach

    He notified federal authorities, and confirmed that the information has now been secured against public access. Deep Root's data was exposed after the company updated its security settings on June 1, Lundry said.
    Cosby prosecutor fights release of juror names

    Cosby prosecutor fights release of juror names

    Cosby's defense against Andrea Constand's allegation that he drugged and raped her in 2004 was that they had consensual sex. Cosby's admissions in that deposition led Montgomery County prosecutors to file charges against him.
    McGregor spars with professional boxer

    McGregor spars with professional boxer

    Mayweather is unbeaten in 49 professional fights and is the clear bookmakers' favourite to trump McGregor later this summer. Boxing champion-turned-promoter De La Hoya had already dismissed the planned fight as an embarrassment for boxing.


Most liked

Kushner arrives in Israel tasked with progressing Trump's 'ultimate deal'
In discussions with Greenblatt before Kushner's visit, Palestinian sources said the phrase "two-state solution" had not been used. That means putting pressure on Israel to restrain its construction of settlements on occupied lands sought by the Palestinians.

Woman 'gang-raped' in moving vehicle , dumped near hospital in India
In yet another incident of crime against woman, a 30-year-old woman was allegedly raped near Sohna , Haryana on Monday. The Noida police reached the spot and also informed their counterparts in Gurgaon.

Yellow weather warning of rain issued by Met Office for Notts
Emergency services are on standby after the Government issued a level three amber heat alert as temperatures are set to increase. The cloudy, rainy weather in the north will then move south bringing fresher conditions for most of the country later this week.

South Korean President Pledges Nuclear Phase Out
Concerns about the safety of nuclear power plants due to earthquakes was one reason for the phase-out policy, Moon said. Numerous reactors are located near residential areas along the country's southeast coast.

Tropical storm warnings issued in Louisiana
The agency is also monitoring another disturbance that is now being labeled as Potential Tropical Cyclone Three. This storm may briefly become a Tropical Storm before weakening in the Caribbean as it quickly pushes westward.

Cavaliers join teams in on Jimmy Butler
Cleveland also reportedly has discussed a trade with the Indiana Pacers centered around superstar forward Paul George . In the meantime, the Bulls are preparing for the draft, in which they own the 16th and 38th picks.

Senate passes sweeping sanctions bill targeting Iran, Russia
The existing restrictions were put in place by President Barack Obama after Russian Federation annexed Crimea in 2014. Sanders said he voted against the larger bill because he said sanctioning Iran could harm the Iranian nuclear deal.

Several injured after vehicle rams people leaving London mosque
Emergency service crews were seen giving cardiac massages to the injured "in a desperate bid to save them", the Daily Mail said. Britain has been on high alert following a pair of attacks in recent weeks that claimed the lives of some 30 people.

Ronaldo eyes more silver at Confederations Cup
Chile is ranked fourth, but lacks the same tradition as Portugal and Mexico and has struggled in South American qualifying. Portugal won 2-1 the only time it faced Mexico in an official match , in the group stage of the 2006 World Cup in Germany.

Qatar says fighter jets deal shows deep US support
Central Command, which includes a state-of-the-art air base the U.S. depends on to target "Islamic State". Tellingly, the $12 billion deal was signed despite Qatar being criticized by U.S.

Trump Weighs Firing Mueller, According To Confidante
Under the regulation, Special Counsel Mueller may be fired only for good cause, and I am required to put that cause in writing. But I'm noticing a trend here: If something is bad for Republicans, Newt thinks it should be abolished.

Oregon Adds A New Gender Option To Its Driver's Licenses: X
Gender non-binary residents will soon be able to select "X" for non-specified gender when they apply for their identification cards.

Turkey summons US ambassador over arrest warrants
Erdogan said the protesters were members of an outlawed Kurdish militant group and the US police failed to act. Men in dark suits and others were recorded repeatedly kicking one woman as she lay curled on a sidewalk.

Trump tweets about Clinton after news of obstruction of justice investigation
Obstruction of justice is a serious charge, and one which led to impeachment proceedings against Richard Nixon after Watergate. Not to mention that Trump and several of his surrogates have complained that people can't seem to let the election go.

Stricker takes blue-collar path to US Open
Determined to avoid the embarrassing rules mess from a year ago, the USGA is shaking up the way it officiates the U.S. He is No 10 in the world - only Tiger Woods and Sergio Garcia were ranked higher at a younger age.