Posted by: youngragingbull | March 14, 2013

Fed Stress Tests: Ally, BB&T fail

Ally Financial and BB&T Corp. both failed their final Federal Reserve stress tests according to results released Thursday.

The stress tests were set up by the Fed to find out if 18 of the largest financial institutions can withstand a deep recession. Specifically, the test was designed to assess whether reserves were necessary to withstand another crisis like the credit crunch of 2008.

Ally, the former GMAC, held 1.52% in capital set aside under a measure called Tier 1 common capital ratio, which was below a 5% regulatory minimum threshold. BB&T’s capital was above the regulatory minimum threshold, but its dividend and stock buyback plan was objected to based on a qualitative assessment of its capital planning process.

Meanwhile, banking heavyweights J.P. Morgan Chase & Co. and Goldman Sachs & Co. passed but were required to resubmit share distribution plans to the central bank by the end of the third quarter because they have ‘weaknesses’ in their capital plans.

The 14 other financial institutions passed the test and are permitted to distribute their capital throughout the next 12 months.


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