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34 | Th e M Rep o RT o r i g i nat i o n s e r v i c i n g a na ly t i c s s e c o n da r y M a r k e t ORIGINATION The LaTesT top 31 Banks Pass First round of Federal reserve 'stress test' For the first time, all banks with more than $50 million in assets passed the Fed's "stress test." t he top 31 banks in the U.S. passed the first round of the Federal Reserve's "stress test," with none of the banks falling below the Fed's capital requirements, according to data released by the Fed on March 5. This marks the first time all banks with more than $50 million in assets passed since the Fed began conducting the test in 2009. "The largest U.S.-based bank- holding companies continue to build their capital levels and to strengthen their ability to lend to households and businesses dur- ing a period marked by severe recession and financial market volatility, according to results of supervisory stress tests," the Fed announced last month. Banks were tested under a hypothetical scenario featur- ing a deep recession with unemployment peaking at 10 percent, a decline in home prices of 25 percent, a stock market drop of nearly 60 percent, and together the banks would see a projected $340 million total in loan losses. Results show the banks' aggregate tier one common capital ratio, which compares high-quality capital to risk-weighted assets, would fall from 11.9 percent in the third quarter of 2014 to a minimum level of 8.2 percent in the scenar- io. This minimum level is higher than the 5.5 percent measure in 2009 and the 7.9 percent ratio from last year. "It means our banking sector is pretty healthy right now from the perspective of how much money they are holding," Anna Krayn, head of stress testing for Moody's Analytics, told USA Today. "Some would argue that there's excess capital in the system," Bank of America's tier one common ratio was 7.1 percent, lower than the 8.1 percent the bank projected from its own calculations. Last year, Bank of America got permission to raise its dividends, which the bank used to reward shareholders. The results from this test factored into the Fed's decision about whether to approve this plan for a second time. Banks have been preparing for stricter Fed regulations by building their capital reserves to protect against losses even before this year's test. Citigroup brought former executive Gene McQuade out of retirement to increase its chances of passing the test this year. Last year, the bank was the only one to fail the test, making this year's test a big deal, espe- cially for CEO Michael Corbat, whose future might be deter- mined by Citi's performance. transcripts show Ben Bernake Was 'Uncomfortable' with Bank of america Bailout While expressing discomfort With the bailout, the former fed chairman admitted no one foresaW the "enormous" losses merrill lynch incurred, Which bofa inherited. i n 2009, former Federal Reserve Chairman Ben Bernake told colleagues he was "uncomfortable" providing extra aid to Bank of America, according to Federal transcripts released last month. The transcripts, released five years after the fact, include discussions regarding interest rates, bank bailouts, and the economy held between Federal governors and regional presidents. Access to these conversations helps shed light on decisions policy makers struggled with during the financial crisis. In January 2009, Bank of America received its second bailout—this time $20 million in relief—from the Fed to help stabilize the company after its purchase of Merrill Lynch. At the time, Merrill Lynch had lost more than $15 billion in the previous quarter and Bank of America had lost $2.4 billion. "We were a little disappointed in Bank of America's monitor- ing in that they seemed a bit behind the curve in terms of following the developments

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