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.