Thursday, October 11, 2012

New Report: 1 in 8 Banks Fail Stress Test via Wall St. Cheat Sheet

October marks the four year anniversary of the Troubled Asset Relief Program that was voted and approved by Congress. In addition to TARP, several monetary easing programs from the Federal Reserve have been launched in order to prop up asset prices and keep the status quo of the financial system. However, a new report reinforces the belief among many that the system is still on thin ice and nothing has truly been resolved.

Trepp, a leading provider of information and analytics to the banking markets, recently released its first Capital Adequacy Stress Test Report of U.S. banks. The New York based firm used its model to analyze and evaluate stressful conditions of balance sheets and income statements of more than 6,000 domestic banks. Trepp’s model is inspired by the framework used by the Federal Reserve’s Stress Testing of the 19 largest banking institutions earlier this year. It combines data from each bank with dramatic adverse inputs to produce “what-if” scenarios for earnings, capital and asset performance for a nine quarter projection period. The outcomes were not comforting to say the least.

Read more...New Report: 1 in 8 Banks Fail Stress Test | Wall St. Cheat Sheet

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