Citigroup Vows to Try Again as Some Lenders Fail Fed Test – Bloomberg

Citigroup (C), SunTrust (STI), MetLife (MET) and Ally Financial failed to get their capital plans approved in the Fed’s stress tests, which mandated a minimum tier 1 capital ratio of 5%. Citi had a projected 4.9% ratio under the tests, SunTrust a 4.8% ratio, and Ally a mere 2.5% ratio.

The Fed is testing to see how the capital of U.S. banks might hold up through a deep recession and a second housing crisis. The scrutiny focused on variables such as trading and counterparty losses and write-offs on credit cards and first-lien mortgages. Most of the 19 banks passed.

via Citigroup Vows to Try Again as Some Lenders Fail Fed Test – Bloomberg.

One thought on “Citigroup Vows to Try Again as Some Lenders Fail Fed Test – Bloomberg

  1. I remember back in late 2006 – early 2007, when I was working across Asia – all the banks were conducting ‘stress tests’ on their residential mortgage lending portfolios – in fact the Aussie banks were testing their portfolios to a whopping 70% decline (yes 70%) in residential property values. . Well, we all know what happened in late 2007 and the ensuring ‘global financial crisis’.

    Being a Presidential election year in the USA – the developing financial storm will keep slowly gathering momentum between now and Nov 2012, then all bets are off as December 2012 and first quarter 2013 roll around.

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