The Federal Reserve board disclosed the initial round of results required under the Dodd-Frank law on the portfolios of the 18 largest bank holding companies.
"The tests - which precede separate results scheduled for next week that could have a meaningful impact on banks' plans for dividend payments - are meant to evaluate how well the firms' capital standing would hold up under a 'severely adverse' economic scenario," writes American Banker's Joe Adler.
The portfolios of the 18 firms, all with at least $50 billion in assets and together accounting for over 70% of the industry's assets, were tested under difficult economic conditions over a supposed nine-quarter period ending in the fourth quarter of 2014.
"The results of the Federal Reserve stress test reaffirm our position that retail banks are in a significantly better position today than in the past two decades," Richard Hunt, chief executive of the Consumer Bankers Association, said in a statement. "The capital increases over the past few years are not temporary, but permanent changes in our industry. Banks are significantly safer and sounder today and will be continue to be so in the future. Stress tests guarantee this and demonstrate our commitment to serving our customers."
For the full piece see "Fed Unveils Dodd-Frank Stress Test Results" (may require subscription).