Major US banks would withstand recession: US Fed

Heartbeat print out

The Federal Reserve on Thursday released initial results of its yearly stress tests to determine whether the nation's biggest banks are financially strong enough to weather a severe recession.

The Federal Reserve is releasing the first part of its annual stress tests for big banks today.

"This year's results show that, even during a severe recession, our large banks would remain well capitalised", Fed Governor Jerome Powell said in a statement.

However, even with the losses in that scenario, the banks' aggregate level of high-quality capital would still cover 9.2 percent of their risk-weighted assets, according to the Fed.

The assessments are created to gauge the potential impact of a severe downturn on bank operations and capital levels as part of the Dodd-Frank financial reform law.

Wells Fargo & Co's US$7.7 billion in trading and counterparty losses came close to firms with larger Wall Street operations, with Morgan Stanley at US$9.5 billion.


America's big banks are a step closer to paying billions of dollars to shareholders after the Federal Reserve determined that their cash reserves were large enough to withstand a severe shock to the U.S. economy. That measure, called the tier-one capital ratio, was exceeded by all 34 banks.

The results portrayed a picture of increasing resilience in the banking sector, with the 34 participating firms having added $750 billion in common equity capital since 2009. But the bank can not do so without the Fed's approval.

All the banks can now amend their plans on dividend payments and stock buybacks to win Fed approval before it announces its decisions on those issues next Wednesday. The second round, however, uses different criteria, so that solid results from Thursday do not automatically signal that all the plans will be approved. This year's results are all the more consequential seeing as they're the last stress tests banks will ever have to face now that we live in Trump's America.

Each year, regulators tweak the exam to keep banks on their toes.

Analysts say Citigroup Inc (C.N) has the most to gain or lose in the stress tests. It was the third straight year that the Fed rejected the plan of the US division of Santander, which is one of Europe's biggest banks, and the second straight rejection for Deutsche Bank Trust Corp., the USA transaction bank and wealth management business of Germany's largest bank.

Related News:

  • NORC poll: Few favor Trump move to ditch Paris accord

    NORC poll: Few favor Trump move to ditch Paris accord

    Not only does Rasmussen have a clear slant toward the GOP president, but the poll referenced in Trump's retweet is from last week. A gender divide remains: as they have from the start of his presidency, men are more likely than women to approve of the job Mr.
    Local NYC Grocers Unhappy with Amazon-Whole Foods Deal

    Local NYC Grocers Unhappy with Amazon-Whole Foods Deal

    Astrachan noted, saying the company will likely maintain that approach as it looks to build market share in groceries. Analysts say there's no reason to think Amazon's deal with Whole Foods will be limited to groceries.

    Rosenstein may need to recuse himself from Russia probe

    He had likened the appointment of the special counsel with the "single greatest witch hunt of a politician in American history". The president made a tweet about his defeated Democratic opponent complaining that the probe is unfair.
  • Lakers take Lonzo Ball with second pick in NBA Draft

    Lakers take Lonzo Ball with second pick in NBA Draft

    The Lakers' pick came right after the Philadelphia 76ers selected Washington guard Markelle Fultz with the No. 1 selection. General Manager Rob Pelinka and President of Basketball Operations Magic Johnson are mulling their options.

    Trump again lashes out at Russian Federation probe, says he is being investigated

    Until now, the White House has been essentially silent on whether Trump was actually a target of a federal investigation . Richard Cullen is a former Virginia attorney general and a former U.S. attorney for the eastern district of Virginia.
    Canada's Brooke Henderson wins Meijer LPGA Classic

    Canada's Brooke Henderson wins Meijer LPGA Classic

    Ko dropped to No. 2 in the world Monday after an 85-week run at the top. He made three birdies and an eagle in his round Friday.
  • Can Amazon persuade enough people to buy fresh food online?

    Can Amazon persuade enough people to buy fresh food online?

    Amazon already offers grocery-delivery services in five markets, but the Whole Foods purchase would let it expand to many more. Whole Foods recently had come under pressure from activist hedge fund Jana Partners LLC, prompting it to overhaul its board.
    Scalise's condition after shooting 'more difficult' than thought

    Scalise's condition after shooting 'more difficult' than thought

    Republicans and Democrats fight for bragging rights Thursday in the annual Congressional Baseball game as one unit - Team Scalise. The American Hospital Association defines "critical" condition as: "Vital signs are unstable and not within normal limits".
    Russian Federation  2-0 New Zealand: Hosts win Confederations Cup Group A opener

    Russian Federation 2-0 New Zealand: Hosts win Confederations Cup Group A opener

    Russia's opening goal had an ugly finish after two pretty pieces of individual skill once the All-Whites defense needlessly lost the ball.
  • What is a Tropical Cyclone?

    It has maximum sustained winds of 40 miles an hour, meaning it is just barely above the threshold to be a tropical storm . This storm may briefly become a Tropical Storm before weakening in the Caribbean as it quickly pushes westward.

    Saudi foreign minister says working on list of Qatar "grievances"

    Al Jazeera said on June 8 it was combating a large-scale cyber attack but that all its entities remained in operation. He said the problem can be solved in a short time because there are no grounds to the crisis.
    Ronaldo explains why he 'deserved' to win the Champions League

    Ronaldo explains why he 'deserved' to win the Champions League

    Now, he's spoken about the season in which Real made history , and claimed it's no less than what they - and he - deserve. I'm a happy man to win the 12th and we'll enjoy this moment now. "We are very confident and the plan is to win more ".


Most liked

Theresa May pledges 'humility and resolve' ahead of Queen's Speech programme
The promise follows a snap election in which May lost her majority. We are in complete unknown territory", he said on Wednesday. Her Government programme goes to a Commons vote next week.

USA congressman Scalise still in critical condition: Hospital
He said doctors have turned down Mr Scalise's sedation levels enough that he has been able to respond to visiting family members. Bailey was spotted Friday in the Capitol, on crutches and out of uniform, accepting congratulations from fellow officers.

Trump calls Warmbier's death a 'total disgrace'
Considering these facts and this tragic outcome we will no longer be organising tours for United States citizens to North Korea. After suffering for 17 months in North Korea and more than a year in a coma, University of Virginia honor student Otto F.

Grocers facing a united Amazon-Whole Foods must adapt
She conceded it might be tough to outbid Amazon , but it could still be worth it to drive up the price and make Amazon pay more. Amazon is expected to lower Whole Foods' notoriously high prices, enabling it to pursue Wal-Mart's customers.

Confederation Cup: Germany Start With Hard-Fought Win Vs Australia
The oldest tried to join him by also scoring his first tournament goal, but Sandro Wagner's diving header was off target. However, even with a lot of individual qualities, it remains to be seen how they'll perform as a unit.

NASA telescope finds 10 more planets that could have life
Such planets are harder to spot because they might have made only a few transits across their star during Kepler's 4-year watch . The telescope has studied some 150,000 stars in the Cygnus constellation , a survey which NASA said is now complete.

Conservatives lead, but Labour gains big in British election, exit polls show
Despite the Tory leader's confidence she can provide "certainty", the result does cast an element of doubt on the Brexit process. A major campaign issue centered on Britain's plan to leave the European Union , also called Brexit.

Rory McIlroy destroys Australian golfer after US Open criticism
But Elkington wasn't done, despite being shown the door by the No. 2 ranked golfer in the world . Dustin Johnson and Jason Day also missed the cut.

All talk, few trades before NHL's expansion roster freeze
All trades involving the Golden Knights are not expected to be made official/public until the expansion draft reveal on June 21. The Islanders were the only team to protect five defensemen , and they might still lose blue-liner Calvin de Haan .

Cosby accuser thanks prosecutors after mistrial
By Thursday morning, after almost 30 hours of discussions spanning three days, the jurors told O'Neill they were at a stalemate. Constand's attorneys released a statement following the mistrial , thanking both the jury and the prosecutors in the case.

Wife: Man who shot congressman wanted to work on tax policy
Trent Franks told Kate Bolduan on "Erin Burnett OutFront" that he has also been contacted by Capitol Police. Near the shooter's home, it's lots of farmland, acres of corn and soybean fields, lots of farmhouses.

Kamala Harris has the mic now, so everybody needs to sit down
She pressed Sessions on his basis for declining to answer questions about his conversations with Trump . "Mr. Sessions seemed to be able to answer that, with some qualification, mostly that he didn't believe he did.

John G. Avildsen, Oscar-winning Rocky director, dies at 81
Avildsen returned to the Rocky franchise to direct the critically panned Rocky V (1990) about a protege who turns on Rocky . Rocky (1976), starring Sylvester Stallone , won three Academy Awards: best picture, best director and best film editing.

Sabres name Phil Housley next head coach
Hall of Fame defenseman Phil Housley is returning to Buffalo after being hired by the Sabres to be their next head coach. Though Botterill was mostly a minor-league journeyman, he and Housley both played for the Calgary Flames from 1999-2001.

Clippers nearing plans build arena near Inglewood
The old Forum is right next to the Rams stadium project meaning Inglewood would have two state of the art arenas in the same city. The front of the arena is littered with statues honoring great Lakers and Kings players from Magic Johnson to Wayne Gretzky.