Coming soon for banks: Stress Test 2

The Federal Reserve wants the 19 companies whose finances were examined closely in 2009 to show how they'd survive another financial crunch.

By Charley Blaine Nov 17, 2010 4:10PM
Updated: 3:50 p.m. ET

The Federal Reserve will require all 19 financial companies that underwent stress tests during the height of the financial crisis to undergo another review of their capital and their ability to absorb losses under an "adverse" economic scenario.

The Fed said today that the financial companies must submit capital plans by early next year showing their ability to absorb losses under a set of conditions to be determined by the central bank.
The companies include Bank of America (BAC), JPMorgan Chase (JPM), Goldman Sachs (GS), Morgan Stanley (MS), Regions Financial (RF) and Metlife (MET).

The one privately held company in the list was Ally Financial, formerly known as GMAC. While the company is managed by Cerberus Capital, the Treasury owns 56.3% of the company. The company plans an initial public offering in 2011.

The request is part of the Fed's effort to step up supervision at the nation's largest financial firms.

The Fed also issued a roadmap for banks that want to raise dividends or buy back stock, with regulators saying firms must show they have adequate capital in place to absorb losses and show an ability to satisfy increased capital requirements.

Big banks, including Wells Fargo (WFC) and JPMorgan Chase, have been pushing strongly to be able to boost their dividends.

Regulators tested the resilience of 19 major bank-holding companies in 2009 and found that 10 of them required a total of $75 billion to reinforce their balance sheets.

The stress tests and subsequent capital raisings by some banks boosted investor confidence in financial stocks and helped the United States pull out of the 2007-08 financial crisis.

Stress tests are designed to determine what would happen to a bank's financial condition in the face of a traumatic event, such as a sharp drop in economic growth or a default by a major borrower.

The government's tests measured potential losses on mortgages, commercial loans, securities and other assets held by the stress-tested banks.

Nine of the tested banks -- JPMorgan and Goldman Sachs, as well as several regional institutions -- were found to have had adequate capital. That finding essentially represented a seal of approval from the Fed.

Here's how stocks of the 18 publicly held financial companies have performed since the 2009 market bottom.

How stocks of the stress-tested banks have fared since 2009
Company

Today

Chg.

Chg. Since '09
BB&T Corp.

$24.54

0.37%

84.23%
PNC Financial Services

$55.80

0.34%

201.46%
US Bancorp

$24.78

0.24%

180.95%
MetLife

$38.92

0.13%

221.65%
American Express

$41.75

-0.43%

306.92%
Bank of New York Mellon

$27.67

-0.05%

53.58%
State Street

$43.00

-0.30%

144.18%
Goldman Sachs

$165.14

0.02%

123.31%
Capital One Financial

$38.64

-0.46%

364.98%
Wells Fargo

$27.03

-0.57%

232.94%
Citigroup

$4.18

-1.07%

309.31%
Morgan Stanley

$25.30

-1.30%

53.51%
JPMorgan Chase

$39.25

-0.91%

146.86%
Fifth Third Bancorp

$12.54

-1.11%

872.02%
Bank of America

$11.67

-2.26%

271.66%
SunTrust Banks

$24.24

-2.44%

159.20%
KeyCorp

$7.81

-2.13%

45.71%
Regions Financial

$5.70

-3.72%

93.88%
Data as of 3 p.m. ET on Nov. 17


11Comments
Nov 17, 2010 11:38PM
avatar
More B.S from Uncle Ben and the Fed. BANKS UNDERGO STRESS TEST! What a joke when the FED is the one that is keeping these banks solvent by giving them our tax dollars! In any language this is criminal intent to rob and defraud the American people !
Nov 17, 2010 5:18PM
avatar
Poor California, poor Nevada, poor Alaska. Woe is they! No earmarks. Let the whining begin!
Nov 10, 2011 3:53PM
avatar
All You republicans make me sick !
Nov 10, 2011 3:43PM
avatar
Maybe all You greedy republicans are the problem ? Oh I really steped into a pile of it  ! To Quote one of Your own !
Nov 10, 2011 2:14PM
avatar
Just remember America You made Your own bed with Your republican greed and now You will have to lie in it ! , You have made only 2 choices with Harley Davidson and Ford You choose from the two ? , I myself woulden't own either one of them !  , -  oh and by the way ? , I have just one question for all of You flag waving republicans , what is going to keep Ford and Harley Davidson from raising their prices through the roof now ? sence You have allowed them to remove all other competition ?    
Nov 10, 2011 2:03PM
avatar
GM has had foreign joint ventures for years now ! did You all just notice ? or is it just You happen to drive a Nazi ford pu truck ?
Nov 10, 2011 1:50PM
avatar
Ford was a Nazi and a personal friend of Adolph Hitler !  Enough said about Ford ! ,  What a shock it must have been for allied forces to find Ford trucks in Hitlers army when they captured Berlin !  , I woulden't give any praise to the Fords of America , remember they are Nazi's !  Oh and by the way what exactly are the honest business's in America today ?
Nov 18, 2010 5:40PM
avatar

Say goodbye to GM, it will be bought sooner or later by China and our Government agrees with this. GM is no longer a growth stock.

The only American auto company will be Ford.

Nov 18, 2010 5:26PM
avatar

GM is the master of hype & lies!  Even to believing their own fabrications! What is the difference now? No new serious product! The old product is sitting on the lots! So , they mover around some numbers to make the gullible temporally feel good! But it's still the same old GM with a Plastic face lift! I give it two weeks !  China will end up owning GM, and then you will see the real change action, and drive one!   "So The General goes, goes America!"  BP owns & runs our Government & now China will be running what was GM...I'm glad I like rice!   

 

Nov 18, 2010 12:09PM
avatar
what a bunch of crap    2 years earlier and the sales for new gm cars would have droped the dow 300  points     good work obame and ben   they both need to be in jail
Nov 17, 2010 6:52PM
avatar
MAYBE WE WAN'T HAVE TO PAY FOR A BRIDGE TO NOWHERE
Report
Please help us to maintain a healthy and vibrant community by reporting any illegal or inappropriate behavior. If you believe a message violates theCode of Conductplease use this form to notify the moderators. They will investigate your report and take appropriate action. If necessary, they report all illegal activity to the proper authorities.
Categories
100 character limit
Are you sure you want to delete this comment?

DATA PROVIDERS

Copyright © 2014 Microsoft. All rights reserved.

Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.

RECENT QUOTES

WATCHLIST

Symbol
Last
Change
Shares
Quotes delayed at least 15 min
Sponsored by:

MARKET UPDATE

NAMELASTCHANGE% CHANGE
There’s a problem getting this information right now. Please try again later.
NAMELASTCHANGE% CHANGE
There’s a problem getting this information right now. Please try again later.
Market index data delayed by 15 minutes

[BRIEFING.COM] The stock market ended the midweek session on a mixed note. Blue chip listings bolstered the Dow Jones Industrial Average (+0.4%) and S&P 500 (+0.3%), while the Russell 2000 (-0.4%) and Nasdaq Composite (-0.02%) underperformed.

Equity indices began the day in the red, but wasted no time regaining their flat lines. Small-cap stocks were not as fortunate as the Russell 2000 spent the day in the red.

Upon returning into positive territory, the key indices were ... More


Currencies

NAMELASTCHANGE% CHANGE
There’s a problem getting this information right now. Please try again later.
Sponsored by:

VIDEO ON MSN MONEY