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 (
) 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
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
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
Wells Fargo 8.2%
Goldman Sachs 6.8%
JP Morgan 6.3%
Bank of Amer 6.0%
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