Fed orders second round of stress tests

Nov. 17, 2010 at 3:19 PM
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WASHINGTON, Nov. 17 (UPI) -- The U.S. Federal Reserve said Wednesday it would put 19 large U.S. banks through a second round of stress tests.

The banks were told to submit financial plans early next year, The Wall Street Journal reported.

In early 2009, the Fed subjected 19 banks that had received billions of dollars from the Troubled Asset Relief Program to tests designed to assess their ability to remain solvent under adverse conditions. The banks included Bank of American Corp., Citigroup Inc., US Bancorp, American Express Co., Goldman Sachs Group Inc., JPMorgan & Chase Co., Wells Fargo & Co., Morgan Stanley, Fifth Third Bancorp, BB&T, Capital One Financial, GMAC, KeyCorp, PNC Financial, Regions Financial, MetLife, State Street, Bank of New York and SunTrust Banks.

The tests were designed to show how the banks would hold up against rising unemployment, a deterioration in the housing market and other variables.

The results found the banks, collectively, required $74.6 billion in additional capital. The orders for each bank ranged from zero -- several banks having passed the tests -- to $33 billion, which the Fed told Bank of America it required as a cushion against possible economic downturns.

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