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The Fed launches new bank stress tests in which lenders will be forced to model a severe...

The Fed launches new bank stress tests in which lenders will be forced to model a severe eurozone recession - a 6.9% decline in real GDP - and a skying domestic unemployment rate. In addition, the 6 largest U.S. banks will need to estimate losses "stemming from a hypothetical global market shock," similar to that of late autumn 2008.
Comments (8)
  • screamin187
    , contributor
    Comments (295) | Send Message
     
    Can anyone else smell these banks being required to raise new capital? The Fed is just doing the stress tests to validate new capital raises. Expect more dilution and lower bank stock prices. No upside risk in my opinion.
    22 Nov 2011, 04:38 PM Reply Like
  • untrusting investor
    , contributor
    Comments (9923) | Send Message
     
    Quite possible. Would not be a buyer of equities at this time and especially bank equities.
    22 Nov 2011, 05:17 PM Reply Like
  • WMARKW
    , contributor
    Comments (10244) | Send Message
     
    And yet I have no recollection of any major bank raising capital, in Europe for example, over the last little while. It has been my contention that the banks should have been forced by regulators to raise capital or be otherwise forced to find buyers or partners. But I think they are all waiting for bailouts.
    22 Nov 2011, 05:32 PM Reply Like
  • leroythedog
    , contributor
    Comments (7) | Send Message
     
    With respect to WFC I disagree we'll see new capital raises. There is a possibility of upside surprise if/when any of these banks pass with respectable numbers, which I think most will.
    22 Nov 2011, 04:44 PM Reply Like
  • jschroe36
    , contributor
    Comments (66) | Send Message
     
    The gov't always underestimates the severity of things...expect a double-digit decline in real GDP in the Eurozone and something substantially worse than the "shock" of '08.
    22 Nov 2011, 04:52 PM Reply Like
  • ebworthen
    , contributor
    Comments (2811) | Send Message
     
    What is the point of FED stress tests, when the FED will backstop these banks with taxpayer money ad infinitum at 0.01% while the banks charge 4%-29% to retail customers?

     

    Theater and pantomime is all this represents.
    22 Nov 2011, 05:02 PM Reply Like
  • Dibber
    , contributor
    Comments (1361) | Send Message
     
    How do you "stress test" a recession? They should stress test Italy, Spain and France defaulting and every European bank losing access to capital. That's a very likely scenerio in 2012.
    22 Nov 2011, 05:38 PM Reply Like
  • Insurance Bull
    , contributor
    Comments (357) | Send Message
     
    Europe is heading for a recession: all of Europe, not just the EU experiment. I want to see exactly how exposed American banks are to Europe. Maybe we will see BAC's share price fall to four and then hear Dick Bove chant "fill your portfolio up withh 99% bank stocks."
    22 Nov 2011, 05:41 PM Reply Like
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