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Fed stress tests on the banks will require lenders to show they can withstand a recession in...

Fed stress tests on the banks will require lenders to show they can withstand a recession in which unemployment rises more than 400 bps, GDP declines 5%, equity prices fall more than 50% (along with the VIX jumping 70%), and residential and commercial property values fall more than 20%. It sounds harsh, but it's still not as bad as what happened from 2007-09. Capital plans are due on Jan. 7.
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Comments (9)
  • wyostocks
    , contributor
    Comments (8244) | Send Message
     
    Ben and Timmy know what is coming.
    15 Nov 2012, 04:23 PM Reply Like
  • bbro
    , contributor
    Comments (9854) | Send Message
     
    They had the same requirements last year...
    15 Nov 2012, 04:28 PM Reply Like
  • The Patriot
    , contributor
    Comments (324) | Send Message
     
    I knew you were going to say that : )
    15 Nov 2012, 05:17 PM Reply Like
  • bbro
    , contributor
    Comments (9854) | Send Message
     
    "It sounds harsh, but it's still not as bad as what happened from 2007-09. "

     

    But you don't understand how undercapitalized the banks were back then...,banks are loaded with TCE now and it will be that way until we forget the pain of 2008 ( which means a long long long time)
    15 Nov 2012, 04:25 PM Reply Like
  • RK
    , contributor
    Comments (400) | Send Message
     
    Meanwhile, our Fed chairman said the mortgage lending remained too tight.
    15 Nov 2012, 04:41 PM Reply Like
  • Ananthan Thangavel
    , contributor
    Comments (836) | Send Message
     
    This is a joke. The VIX jumping 70%? That would take us to 32 on the VIX, which is not even high if looking back at the peaks over each of the last 4 years. A 20% fall in property prices is also pretty plain vanilla.
    15 Nov 2012, 09:44 PM Reply Like
  • brettmatsuura
    , contributor
    Comments (2) | Send Message
     
    Sounds like they are starting to prepare for the worse. As soon as this Real Estate Bubble pops it's going to make the crash of 2008 look like a picnic.
    15 Nov 2012, 10:47 PM Reply Like
  • jhooper
    , contributor
    Comments (6045) | Send Message
     
    This is the, "no bank shall be under $100 billion in asset size" test, or the "regulators are tired of going to small town USA for an exam, and only want to live in Charlotte or NY or some other big city so we are going to get rid of community banks" test.
    16 Nov 2012, 07:39 AM Reply Like
  • dividend_growth
    , contributor
    Comments (2895) | Send Message
     
    You guys should check out European bank "stress test" and see what kind of joke that was.

     

    The US bank stress test has been indeed very severe, basically assuming a repeat of the Great Depression.
    17 Nov 2012, 04:18 AM Reply Like
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