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17 of 18 US banks pass stress tests

Thu, Mar 7, 2013

Personal Finance

A police officer guards the Federal Reserve building on September 10, 2011 in Washington, DC
A police officer guards the Federal Reserve building on September 10, 2011 in Washington, DC
(┬ęGetty Images/AFP/File)

All but one of 18 top US banks passed tough stress tests aimed at seeing if the financial industry could weather a new deep crisis, the Federal Reserve announced Thursday.

Government-controlled Ally, the rescued former finance arm of General Motors, was the only bank to fail the test of capital strength.

Seventeen of the banks tested showed their capital levels would hold up above a five percent minimum threshold if the economy was again rocked with the kind of crisis that sent the US financial system into turmoil in 2008.

The test showed the banks collectively much stronger than a year ago, with their aggregate common capital ratio holding up at 7.7 percent, even after losing $462 billion in the theoretical crisis scenario.

Last year, four banks missed the five percent cutoff in the tests.

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