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Fed Stress Test Released: Citi, SunTrust, Ally And MetLife Have Insufficient Capital
When we announced the news of Jamie Dimon's surprising announcement, we said that "Since we are now obviously replaying the entire credit crisis, from beginning to end, must as well go all in. Now - who's next? And perhaps just as importantly, who isn't." Who isn't it turns out are 4 banks that did not pass the Fed's stress test results. These are SunTrust, naturally Ally, MetLife and... Citi. Way to earn that 2011 $15 million comp Vic! To summarize: across the 19 banks taking the test, the maximum losses are projected to hit a total of $534 billion. But at least Jamie Dimon gets to pay his dividend. Also, the European LTRO stigma comes to the US in the form of banks who do dividend hike/buyback, vs those that do not.. and of course the 4 unlucky ones that fail the stress test entirely.
Banks at or below 5% are ooopsie.
From the Fed:
The results of the stress scenario projections suggest that the 19 BHCs as a group would experience significant losses under the assumptions of the Supervisory Stress Scenario. Losses at the 19 BHCs are projected to total $534 billion over the nine quarters of the scenario, including losses across the loan portfolios, trading and counterparty credit losses from the global financial market shock, and losses on securities held in the BHCs’ investment portfolios. Losses related to operational risk events such as fraud, computer systems failure, and employee lawsuits, and losses related to mortgage repurchases, which are included in pre-provision net revenue (PPNR), add another $115 billion to this total. Projected PPNR at the 19 BHCs is $294 billion over the nine quarters of the scenario. Together, the high projected losses and low projected PPNR result in projected net income before taxes of $222 billion for the 19 BHCs. This is an extremely low level of net income relative to historical experience in the U.S. banking industry, even in periods of considerable economic and financial market stress.
Despite sometimes significant projected decreases, most of the BHCs maintain stressed regulatory capital ratios including all planned capital distributions above regulatory minimum levels over the course of the stress scenario horizon.24 Overall, 4 of the 19 BHCs have one or more projected regulatory capital ratios (including capital distributions) that fall below regulatory minimum levels at some point over the stress scenario horizon, including 3 BHCs with a stressed ratio of tier 1 common ratio below the 5 percent benchmark established in the capital plans rule. In interpreting these results, it is important to recall that the Federal Reserve’s stress scenario projections are deliberately stringent and conservative assessments under hypothetical, adverse economic conditions and the results are not forecasts or the most likely outcomes for these BHCs.
The minimum levels for BHCs to be considered adequately capitalized are 4 percent for the tier 1 ratio, 8 percent for the total capital ratio, and 3 or 4 percent for the tier 1 leverage ratio. Based on the U.S. capital adequacy guidelines, the tier 1 leverage minimum is 3 percent for BHCs with a composite BOPEC rating of "1" and for BHCs that have implemented the Board’s risk-based capital measure for market risk. The tier 1 leverage minimum is 4 percent for all other BHCs. The tier 1 leverage ratio minimum is 4 percent for Ally Financial Inc., American Express Company, Capital One Financial Corporation, and MetLife, Inc., and 3 percent for the rest of the 19 BHCs participating in CCAR 2012. The capital plans rule further stipulates that the BHCs must demonstrate their ability to maintain tier 1 common ratios above 5 percent.
This is what the economic conditions were in the worst case:
So... Buy the dip?
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Fire Tyler Durdens and lets bring Robo as iZH chief editor, bitchez.
To top of the this day in Fantasyland ... Greece's debt got UPGRADED by Fitch!
Well then, let's get on the bullish train and go all in! The world's financial problems are all fixed.
Buy food. This is just insane.
Growing and raising my own already. There is not one bone in my body that wants to buy stock in any corporation at this level. I invest in livestock on 4 hoofs. I control that investment and the market is fair and free for the most part. No room for blood sucking parasites taking the cream off the top on my investment dollars anymore.
"Seed capital" has gotten a whole new consideration in my world.
I wonder if JPM passed because of all of the MF Golbal Customer Money they have on their balance sheet. Now they can pay it to Shareholders and no one will ever know.
Shareholders? Who are they?
Any and all loose cash goes immediately into executive bonuses.
Its all about real estate exposure.
http://confoundedinterest.wordpress.com/2012/03/13/ally-citi-metlife-and...
AND they left out HELOC exposure.
So, should I stop paying on my Ally mortgage now?
Guidance and /Part time Jobs are { synergise}. When we become China, they (jobs), become { symbiotic} .>
GOOD BYE ZEROHEDGE!
This is my last post and last time reading your blog.
You've been insightful and interesting and honest. Great reading actually.
But one thing you definitely have not been is successful at navigating this market. Every turning point to the upside just completely ignored, missed and laughed at. Too bad. cntrl-P works.
Sure gold, great call. But all the bearish, sky is falling, the world is collapsing hysteria. Gimme a break! So damn wrong and for so damn long. The coordinated, govt., politician, central bank and media driven control of this market has driven it higher in your face every single time since 09.
So goodbye zerohedge. Have fun picking apart the minutia of every datapoint. Please let me know when you get bullish on the stock market so I can sell and go short.
My 2 cents is that you have been wrong for the right reasons, if that makes any sense? The PTB are driving us toward the end of capitalism and freedom as we knew it in the past 1,000 years. Centralized and socialized state capitalism is the model that Obummer and the failures of Europe want on a global scale. They can't have it with an independent, strong reserve currency and central bank in the US. This will collapse as you have been saying over and over and over.
But think about it. It already has collapsed, no? Where is this market without the fed backstopping $15T in 08/09 with complete autonomy and secrecy, QE^x or LTRO or the next gimmick for money printing and central bank ownership of worthless assets that banks bought, created or securitized?
This is how freedom dies. And that's what the leaders of the "free" world want. As soros says, an open society where every culture is equal and every model is on a level playing field with everyone. No way that happens without a single currency, a single govt. and a single bank. Who will lead such an organization? You must know by now Barry is his name. Think it through. That's the end game. Minimize America, elevate the world's underclass, destroy despot dictators into chaos reliant on one group.
You listen to Soros. Then you should leave ZH.
You suggest that the Tylers have been wrong, could you provide just a single reference to back up that statement? I know you can't respond as the above was your last post, so I will respond on your behalf. There is no evidence that the Tylers have been wrong, in fact I think if you search the archives you will find evidence to the contrary as the Tylers have suggested that the market, rigged as it is, could go parabolic.
dearest clonie0'mine!
there is one tyler b/c tyler sez there is one tyler
don't blame me, just get w/ the program, here!
the idea that he couldn't have been wrong, just once, is practically religious, isn't it?
It's hilarious and sad that some believe ZH has been wrong when ZH is all of 3 years in the making (revealing mechanisms such as HFT that no other source, main stream or alternative, had never broached before), and the secular bear market is now 18 years in the making.
Don't let the right shoulder hit you in the ass on the way out, you pivot, intra-nanosecond top and bottom picking savant, you.
Good thinking but you probably wouldn't even if the data was staring you straight in the face.
There probably won't be another shorting opportunity. When the stock market collapses in itself, there will bank holidays and no trading allowed either way. Shorts will not be able to collect just as the CDO insurance will not be collected.
2008/2009 was a one time off event. It was orchestrated and it benefited a few elite people, hurting the vast majority of the population. They pulled the plug in 2008 and they can pull the plug again, but then they will simply not pay your short bets. Mark my words on this.
Now, you have a choice. You can invest your money in tangible assets such as PMs, guns, ammo, non-perishable food, agreable land and livestock, gasoline, diesel, tools, nails, and a few other things OR you can keep your money in your trading account and keep chasing the dream and the illusion that your money will grow.
YOU ARE NOT IN CONTROL OVER YOUR FINANCES WHEN YOU BUY EQUITIES. You can be in a winning position and hope to sell at the right time. You may miss the opportunity because you are at the mercy of corrupt and manipulative bankers, brokers and hedge funds. Unless you are in the top 1% with the power to control the equity market, you've got nothing.
My investments are doubling every year since I've started raising cattle. Now that is a trade I cannot lose unless the world stops eating beef. Granted I have put a whole lot more effort into this trade but I've learned alot! Wall Street can kiss my ass for the rest of my life. I love them as customers of good quality beef but I loathe them as politicians or financial advisors. They're second only to preachers and you're losing money the minute you walk through their doors.
See ya!
No Doubt! What a whiny, butthurt drama queen.
il·lu·sion
(-lzhn)
noun
Please circle the correct definition of 'illusion'...
A. An erroneous perception of reality.
B. An erroneous concept or belief.
C. Something, such as a fantastic plan or desire, that causes an erroneous belief or perception.
D. Anything printed, spoken under oath by any Bankster / Fedster, or trotted out by the MSM pressitudes regarding the greatly improved health and recovery of the American economy.
E. All of the above
So they were pricing in a below 10,000 Dow in the first half of 2012, and below 8,000 by Q3 of 2012.
Does the Fed have a strange premonition of Mr. Market taking a nosedive? What are the odds there Sparky? Hah !
Wow, they must really be screwed up if they can't pass a stress test that is designed for everyone to pass.
Didn't they delay the stress test to give the banks more time to cook their books?
I guess they want their books extra well done instead of medium rare.
Either way they are toast.
You have cramer of mad money on right now telling everyone that "the fed doesn't impact the market anymore" and that "the recession is over"
Completly ignoring the fact that Zero Interest rates will not be around forever.
They are clearly setting the market up for a pump and dump, the biggest crash ever must be close / right around the corner.... for them to be talking up the market this much.... short....
The recession was over 2 years ago.
Welcome to the recovery.
Want to see how fast FED impacts the market. Have it pull some of its extraordinary measures tomorrow. Announce NO QE in 2012. Announce a rate hike for Q1 2013. See how fun that will be. Never mind winding down it securites portfolio.
Cramer is such a fucking idiot, clearly he forgets last wednesday.
In a bull market underpinned by $7T in Central Bank Liquidy and Trillion Dollar budget deficts as far as the eye can see, every bull market moron is a genius.
No rate hikes until 2014 is what they said before. They can reneg on that statement of course but they would shoot themselves in both feet if they did. My prediction is that rates will stay put through 2013. After that? Who knows. Greece had its jubilee, Portugal, Ireland and Spain up next. Italy right around the corner. The US can't bail itself out indefinitely. Bond market is screaming bloody murder with 75% haircuts across the board.
Everything is obviously fine...all the banks increased their dividends, yes?...and Ben said the economy is humming along--job growth, etc.
So why let 47 million on food stamps bother you?
...or massive deficits?
...or massive shadow inventory?
...or massive Fuki radiation coating Cali coast?
...and so on.
The markets clearly no longer depend on human survival and health to grow.
I imagine that if every man woman and child were suddenly to disapear from the planet for 10 years, the market may actually grow!
Think Bigger " SheepDog" MUCH Bigger!
Hey... where is AIG... oh... they are not a bank... nevermind...
Citi's at a 5.9 and JPM at 6.3. JPM is OK (can buy back stock, raise its dvidend), while Citi's got one toe in the grave and needs to raise capital? Im not taking issue w/the fact that Citi is a train wreck waiting for the end of the line (coming soon). Rather, it's the idea that a 40bp difference is a difference of degree or substance. It is not. This entire exercise is a farce designed to instill a false sense of security (in God knows whom?....does anyone take the Fed seriously anymore? anyone?).
Wake me when they resume mark-to-market accounting on the asset side. Untill then, it's all a eye wash ... a pack of lies wrapped in a falsehood surrounded by a prevarication.
One last thing, remember Dexia was considered well capitalized last fall by similar (albeit European) tests...until it wasn't...last fall.
Any bank who fires a woman for being "too hot" should deserve to fail
I mean, this chick they fired is so sexy shes in *my* top 5. That bangin'
http://www.youtube.com/watch?v=E8m_9HEKHNc
why don't they just stress test Ben's printing press, as long as that can print a trillion a second, nothing is going to happen
Inflation works on Stock Markets too?
hmmmmmmm.....makes sense?
Citi writes up the best doom reports and gives out the best student and car loans. F*ck me...
Crazy busted market. The FED drops the 'inflation is picking up' USD goes bid, oil goes bid and gold sells, then the market juiced it's self for the Jamie JPM Chase attempt at beating down his Wall Street competition.
You gotta laugh at this madness.
Still 13000 was smashed dragged up the S&P, Euro slammed, PIIGS one yr yields climbed. Something lurking in the waters...
"Yet Gold plummets!? How does this nonsense make any sense."
You answered your own question. There is no sense, therefore nonsense. i.e. one big f'ing joke.
Regions increases let alone increases the most...WHAT??? They haven't even paid back tarp yet. LMFAO!!
The answer to all this is simple.
Bernanke wants to keep his job and needs Obama to be re-elected.
Give banks authority to buy more of their own shares and help raise the market.
See, it is so simple.
PPT COMMANDER: "Geez! I wish Bernanke had gotten with us on the stress test information sooner.... like before this morning.... I hate having to pump up the Dow by 200 in one session without any good reason.. just to prevent a possible market dump tomorrow!"
PPT LIEUTENANT: "Hey, look on the bright side. At least you pushed us over that pesky 13k psych mark we've been stuck on. But seriously, thank God Dimon came on late with that buy back and dividend bit... he saved your ass... you really probably need to send him a few bottles of JWB"
PPT COMMANDER: "Yep, you're right. The markets are trading thin enough though as it is without us losing even more credibility".
PPT LIEUTENANT: "Who are you worried about dumping? The only ones in the markets are us and the hedge funds"
PPT COMMANDER: " Yeah I Know. I just want to go back to the good 'ole days when I felt like I was doing this for a Righteous Cause... you know.. keeping America and Americans employed... and our economy from sinking into a huge hole. These days I feel like I'm just manipulating the markets at the whim of the Big Boys... It just starts to feel like a sham, ya know?"
PPT LIEUTENANT: "I know what you mean. I've been loading up on PM's for years because you and I both know when TSHTF we'd better be ready to retire in Costa Rica".
PPT COMMANDER: " Tell me about it. I bought a few thousand ounces of silver about a month ago when the Euro looked like it could have crashed and burned. I thought that might have been the end of it. Man those guys in Europe have sure learned a few tricks from Bernanke and Geithner, haven't they?"
PPT LIEUTENANT: "No doubt. No doubt."
On the flip side, though, State Street always seems to come out on top - for a humongous investment bank.
Somebodies there know their sht, methinks.
Meet the new Lehman.
So wait...in a worst case doomsday scenario, we're all good?
I guess we won't be needing to bail anyone out again - ever. Party on, dudes!
tyler will be throwing the last bit of dirt on zero hedge followers- its his job to bury the shorts. He's a tool for GS.
Capital ? lol who needs that we have BAILOUTS.
Cmon , does anyone seriously believe the U.S. Govt would let any of their buddies fall?
They get the bailouts, we get the bill and pay for it with our capital and our assets.
Thats how it works, Obama and his friends drink and laugh and have parties while the rest of the country burns.
I'm cashing in my PMs and headed to the west side where all the crackheds are and gonna invest me some money in Tide detergent. That shit is the new gold. Buy low, sell to family dollar high. Or the trunk thing. Few cases from the crackheds and you can start your own shop. Who TF needs wacky bernake bux when you can deal in crack and Tide?
Failing these stress tests is like striking out in slow pitch softball.
Time for Ally to change their name again!