The Federal Reserve released results of its "stress test" Tuesday, announcing that four banks, most notably Citigroup, were not keeping sufficient capital on hand. Suntrust, MetLife, and Ally also failed some part of the test, which measures whether 19 of the nation's biggest institutions have enough capital to survive a severe recession. The results will have implications for those banks and for the industry, but in its report, the Fed tries to remind the rest of us to keep our cool. After all, 15 of 19 banks did in fact pass the test. Further, there's the factor of how hard the test actually was:
In interpreting these results, it is important to recall that the Federal Reserve’s stress scenario projections are deliberately stringent and conservative under hypothetical, adverse economic conditions and the results are not forecasts or the most likely outcomes for these BHCs.
Basically, the economy would have to really tank for those four banks to fail. Also worth noting, the Fed only rushed the results out Tuesday because J.P. Morgan scooped them by publicly announcing they'd passed the test. Maybe J.P. Morgan chief Jamie Dimon could have snagged a job at Bloomberg in another life.
This article is from the archive of our partner The Wire.
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