US Fed: Major US banks would withstand recession

US Fed: Major US banks would withstand recession

America's big banks are a step closer to paying billions of dollars to shareholders after the Federal Reserve determined that their cash reserves were large enough to withstand a severe shock to the U.S. economy.

The Fed said that the banks would collectively lose almost half a trillion dollars in its most extreme scenario but they would still be able to lend money. "This would allow them to lend throughout the economic cycle, and support households and businesses when times are tough".

Since 2009, the almost three dozen firms have added more than $750 billion in capital to their coffers.

Banks will get the chance to revise their capital plans before next week's results are released.

Possible Assassination List of GOP Lawmakers Found on Scalise Shooter's Body
Hodgkinson died at the hospital Wednesday after a shootout with Scalise's security detail and the Alexandria Police Department. The gunman was believed to have harbored unfavorable views toward Republicans at large, including President Donald Trump.

The 34 banks tested would have losses of $383 billion under what the Fed calls a "severely adverse" scenario: a 10% unemployment rate, stressed loan markets, and a drop of 35% in the commercial real estate market.

This is the seventh year in a row the Fed has run stress tests, which were put in place after the financial crisis.

The banks that now undergo the exam have also strengthened their balance sheets by adding more than $750 billion in top-notch capital, the Fed said.

The latest downturn scenario includes: the US unemployment rate peaking at 10 percent in the third quarter of 2018 - up from 4.3 percent in May; a 49.7 percent decline in the Dow Jones Industrial Average; a decline in home prices of 25.7 percent and a 34 percent decline in commercial real-estate prices, both between now and December 31, 2018; an increase in 30-year mortgage rates to 4.6 percent; and an inflation rate of 1.4 percent in 2017 and 1.8 percent in 2018.

Opposition to GOP Health Bill Rising
Asked by Bloomberg if he had seen the Senate version of the bill, Mr McCain responded, "No, nor have I met any American that has". The situation is prime for ridicule from Democrats , who Republicans previously accused of "rushing" Obamacare through Congress.

Dodd-Frank stress tests force analyze whether banks could survive hypothetical scenarios created to gauge a major firm's financial stability.

That means even if a bank passed past year, there's no guarantee it will do so again. Its results are being watched especially closely by shareholders who have been wanting management to buy back more of its common stock, which is trading below what its assets are worth.

Powell said this week the Fed would be open to reasonable changes to the law, including the threshold for including banks in the stress tests.

Each year, regulators tweak the exam to keep banks on their toes.

McCain: Americans 'stupid' to travel to North Korea
Doctors last week said Warmbier had suffered severe neurological injuries, for which tests did not conclusively reveal the cause . The U.S. side is expected to press China to cooperate on a further toughening of global sanctions on North Korea .

A Fed official said Thursday that the results show the industry is well-capitalized and credited the reforms with boosting lending for banks. Increasing dividends costs money and the government doesn't want banks to shrink their capital reserves, making them vulnerable in another recession.

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