Fed to release initial CCAR stress test results for the 30 largest banks today at 16:00ET
- Results from supervisory stress tests conducted as part of the Dodd-Frank Reform and Consumer Protection Act will be released today after the close. The exercises help assess whether institutions have sufficient capital to absorb losses and support operations during adverse economic and financial market conditions over a period of nine quarters.
- The stress tests will test banks' ability to withstand a hypothetical recession beginning this year while remaining well-capitalized with Tier 1 common equity ratios of at least 5.0%. The severely adverse scenario this year includes a 4% jump in the unemployment rate during 2013, 4.75% negative GDP growth (versus -5.0% GDP in last year's test), a 50% decline in equity prices (unchanged from last year) and a 25% decline in real estate prices (versus a 20% decline in last year's test).
- Last year, 17 of 18 of the biggest financial institutions in the US passed its stress test scenario. Ally Financial was the only institution that failed to meet thresholds.
- Many participants will disclose details from their stress test results after the close today. Banks will disclose their 2014 capital allocation plans after the release of the final CCAR results on March 26th.
- The comprehensive results from the Comprehensive Capital Analysis and Review, or CCAR, will be released on Wednesday, March 26, at 16:00ET. Under CCAR, the Fed evaluates each company's plans to make capital distributions, such as dividend payments, stock repurchases, or planned acquisitions.