Finally, 34 firms have attained approval by the Federal Reserve for capital return plans. This is the first time that all the 'stress tested' banks passed the Fed's requirements. What does this mean?
Big U.S. banks won approval from the Federal Reserve on Wednesday to return money to shareholders, suggesting regulators believe they are healthy enough to stop stockpiling capital—and, in some cases, start giving it back to investors.
In reality, we don't really know exactly what this means for the future of financial institutions, however, we can start assuming that this marks a turning point from the pre-crisis days in terms of bank reliability. Many banks are looking to pay out more than they earn over the next year.
Still,
“I’m pleased that the [stress-test] process has motivated all of the largest banks to achieve healthy capital levels and most to substantially improve their capital planning processes,” Fed governor Jerome Powell said in a statement Wednesday.The largest firms, however, “continue to fall short of supervisory expectations” in a few areas, including maintaining accurate data and identifying risks in new products or underwriting standards, the Fed’s report said.
Regardless, the banks' efforts seem to have paid off. They are better capitalized and managed than before the financial crisis.
What do you all think this really means? Are bank stocks going to rise? Do you think this level of Federal Reserve inquiry is good enough?
I'm also curious as to how that will affect us. Will this have any significant effect on people working at banks or will this be felt solely by the shareholders?
Liquidity Stress Testing in Mutual Funds (liquidation of portfolio in X days) (Originally Posted: 11/21/2017)
Hey folks,
There's not much info I can find on this subject matter. While conducting stress testing of mutual funds, should you be looking at specific fund level or at aggregate funds that the company manages?
Say there is Mutual Fund X and Mutual Fund Y under Company A. When looking at the % of each fund that can be liquidated in X days, should I combine the stock holdings?
Say MFX holds 10,000 Stock W, and MFY holds 20,000 Stock W.
Stock W's 60 day ADTV is at 2,000 units per day.
Now, assuming you take the benchmark as 20% of average daily volume at which you wish to liquidate your holdings. For MFX, this tells you that you can liquidate your position in 25 days (10000/(0.2*2000)). For MFY, it would take 50 days.
However, is this sensible? Wouldn't it be more product and more reflective of a real-world scenario, if the stock holdings of MFX and MFY were consolidated given that they are managed by the same company (and especially so if they are exposed to the same market segment). By this, I mean shouldn't it be such that (30000/(0.2*2000)) = 75 days, and MFX under this scenario could dispose of 133.33 shares and MFY 266.67 shares on a proportional basis?
Would appreciate some feedback here.
Thanks!
Hi charmingchimp, whoops, looks like nobody chimed in here.... maybe one of these discussions below is relevant:
More suggestions...
If those topics were completely useless, don't blame me, blame my programmers...
Bank stress test results leaked? (Originally Posted: 04/20/2009)
http://turnerradionetwork.blogspot.com/2009/04/leaked-bank-stress-test-…
Is this credible? The Treasury actually commented on it (http://www.bloomberg.com/apps/news?pid=20601087&sid=aZCb6UIETseA&refer=…) and supposedly the SEC contacted the blogger as well.
But this guy is a white supremacist, so I really don't know if this is credible.
What do you guys think?
I don't think the us gov't is denying it if it is true. That's just not something you do. I think it is ridiculous that we have to assume they will be leaked, and that people like barney frank are able to use that threat as an argument to violate the trust banks put in the gov't and publicize results that are not supposed to be.
I'm sorry but I have to call bullshit on this. If this had any merit people would be rioting in the streets right now. Basically, what the report is saying, is that doomsday is coming tomorrow. Things are bad, prob very bad, but def not as bad as they made it sound.
I'm not sure what the hell you people are talking about. It's common knowledge in policy circles and academics that the "stress tests" are a farce. (When you have a crisis of confidence- which is what it initally amounts to- then the best action is to reassure investors and the public- hence makeup "stress tests" that banks "pass").
Come May 4 when the results are officially released we will "see" how strong our banks are. The results for these "stress tests" were decided before it ever started.
I'm sure Mr. Turner's blog is a great source. When not writing antisemitic and white supremacist blog posts he doubles as an authority on bank stress tests. His sources are sure to be airtight.
Roubini Weighs In on Stress Tests (Originally Posted: 05/05/2009)
In case you haven't seen it yet, here is another excellent analysis on the current situation by Nouriel Roubini, particularly as it relates to the stress test results about to be released:
http://online.wsj.com/article/SB124147831175584985.html#mod=djemEditori…
As usual, he provides some scary insight:
He's usually spot on. What is the overall consensus of the credibility of the stress tests among WSO members?
I struggle to understand what the government seeks to achieve with them, other than placating John Q Public by pretending they are monitoring the big bad banks.
http://nymag.com/daily/intel/2009/04/nouriel_roubini_i_am_ugly_but.html
Roubini is a player.
Roubini wants the government to slowly unwind derivative products - not for me
New Fed Stress Tests (Originally Posted: 11/28/2011)
Since the Fed is expected to release a new stress tests for top 31 US banks,
http://www.bloomberg.com/news/2011-11-23/fed-seeks-to-bolster-confidenc…
Any idea when these stress tests results are due and expected to be released.
Also who make up the top 31 US Banks. Any link as to where I can find them. Much appreciated and pleasant sunday all.
"Also who make up the top 31 US Banks. Any link as to where I can find them." typical fat dude, too lazy to determine the most basic list of the biggest banks on his own
lol ...bortz911 what about the first part of the question. When are stress tests expected to be released for the top 31 US banks. Are these dates secret and only available to fed officials.
Stress Tests (Originally Posted: 03/13/2012)
For all you monkeys out there who keep a vigilant eye on the Fed...It was announced that four key banks failed the stress test to withstand severe economic events. They are...(drum roll please) Citigroup Inc., SunTrust Banks Inc., MetLife Inc. and Ally Financial. Ally Financial (formerly GMAC, wonder why they did a rebranding, huh?) fared the worst. No one should be surprised by Citi either. Mandatory reading for wannabe monkeys.
http://online.wsj.com/article/SB100014240527023045379045772797206714711…
Edit: if you can't access it, copy and paste the title into Google.
So much for Citi being the surprise winner: http://www.reuters.com/article/2012/03/12/us-banks-stresstests-idUSBRE8…
[quote=asiamoney]So much for Citi being the surprise winner: http://www.reuters.com/article/2012/03/12/us-banks-stresstests-idUSBRE8…]
haha Exactly.
[quote=asiamoney]So much for Citi being the surprise winner: http://www.reuters.com/article/2012/03/12/us-banks-stresstests-idUSBRE8…]
ha ha ha
Good article, thanks for the post.
Banks Stress Tests (Originally Posted: 03/14/2012)
How do bank stress tests work?
Power of the internet... http://dspace.cigilibrary.org/jspui/bitstream/123456789/26775/1/Bank%20…
[quote=EuroLocust]Power of the internet... http://dspace.cigilibrary.org/jspui/bitstream/123456789/26775/1/Bank%20…]
good find
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