Announcement

Collapse
No announcement yet.

US banks braced for stress tests

Collapse
X
 
  • Filter
  • Time
  • Show
Clear All
new posts

  • US banks braced for stress tests

    http://www.ft.com/intl/cms/s/0/e51c3...44feab7de.html
    Next week, the banks find out whether the Fed will allow dividend payouts or buybacks under capital planning exercises that are part of the stress test process.
    Banks complain that the Fed is being unrealistic...
    On the other side, Anat Admati, a professor at Stanford University, argues that there is “no way that the stress tests address the full interconnectedness of the system”.
    Although the tests now include a scenario for the biggest Wall Street banks involving the collapse of their biggest counterparty, she says: “You can’t predict what will happen in that case. If one counterparty fails there might be 10 other counterparties failing at the same time.”

  • #2
    Re: US banks braced for stress tests

    http://www.americanbanker.com/bankth...rce=newsletter

    Data from the Office of the Comptroller of the Currency shows that just the top four U.S. banks — JPMorgan Chase, Citigroup, Goldman Sachs and Bank of America — have over $210 trillion in notional derivatives exposure, or about one-third of the global total.
    Insane concentration

    Comment


    • #3
      Federal Reserve: Almost All Big US Banks Could Withstand Economic Jolt

      http://www.voanews.com/content/feder...t/1876206.html
      The Federal Reserve said that 29 of the country's 30 biggest banks -- excluding a regional bank in the western U.S. -- have enough money on hand to withstand a hypothetical deep recession. Such a downturn would include a sharp rise in unemployment, a nearly 50 percent drop in the country's major stock indexes and a steep drop in home prices.
      Analysts say that the better outlook for the banks could allow them to again pay dividends to their shareholders for the first time in recent years.
      full report: http://www.federalreserve.gov/newsev.../20140320a.htm Compare and contrast with Taleb: http://www.imf.org/external/pubs/ft/wp/2012/wp12216.pdf

      Comment


      • #4
        Re: US banks braced for stress tests

        Somehow 29 of 30 became 25 of 30.
        The capital plans of Citigroup, HSBC North America Holdings, RBS Citizens Financial Group and Santander Holdings USA all were rebuffed because of flaws in their oversight practices or what the Fed calls "qualitative concerns."
        http://www.usatoday.com/story/money/...tests/6922129/

        Comment


        • #5
          Re: US banks braced for stress tests

          Originally posted by Slimprofits View Post
          merely an "unexpected revision" ?

          Comment


          • #6
            Re: US banks braced for stress tests

            I sent an email to the bloomberg reporters and editors that worked on their story which reported 29 out of 30 passing, asking where that number came from. http://www.bloomberg.com/news/2014-0...al-target.html

            Comment


            • #7
              Re: US banks braced for stress tests

              I received a reply back from the Bloomberg.com editor. There are two stress tests! http://www.federalreserve.gov/bankin...l-planning.htm and http://www.federalreserve.gov/bankin...ress-tests.htm

              Comment


              • #8
                Re: US banks braced for stress tests

                From the Dodd-Frank Act Stress Test 2014 - http://www.federalreserve.gov/newsev...20140324b.htm:
                The Federal Reserve’s severely adverse scenario projections estimate that the 30 BHCs as a group would experience significant losses under the severely adverse scenario. In this scenario, losses are projected to be $501 billion for the 30 BHCs in the aggregate over the nine quarters of the planning horizon.
                In other words, the "severely adverse scenario" test is roughly equivalent to the previous worst-case scenario, i.e. 2007-2009. Shouldn't the Cardinal Rule of stress testing be that it exceeds anything previously experienced? My god...

                Comment

                Working...
                X