U.S. ECONOMICS: Fed Discloses Results of Stress Test


In the event of a "severe recession", twenty-nine of the thirty largest banks which operate in the U.S. would realize losses of more than $500 billion, but are still adequately capitalized to sustain a major economic shock.

The results of the Federal Reserve's "stress test", which determines if the banking system has enough capital to withstand a major economic recession, gave a passing grade to all but one of the thirty banks under scrutiny. Zions Bancorp ( ZION ) failed to meet the Fed's minimum standards with Tier 1 common capital ratio of 3.5%, below the 5.0% minimum. The aggregate Tier 1 common capital ratio compares high-quality capital to risk-weighted assets.

This is the fourth round of stress tests led by the Fed since 2009 and is the second year that the Fed has conducted stress tests pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act.

These results will factor into the Fed's decision next week to approve or deny individual banks' plans for returning billions of dollars to shareholders through dividends or share buybacks.

Of the nation's largest banks, Tier 1 results are as follows:

Wells Fargo 8.2%

Citigroup 7.0%

Goldman Sachs 6.8%

JP Morgan 6.3%

Bank of Amer 6.0%

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

Copyright (C) 2014 MTNewswires.com. All rights reserved. Unauthorized reproduction is strictly prohibited.

This article appears in: Investing , Commodities

Referenced Stocks: ZION

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