There’s One Big Problem With the Fed’s Latest Stress Test

Jon Government

This is a syndicated repost courtesy of The Daily Reckoning. To view original, click here. Reposted with permission.
The Federal Reserve released its latest stress test report in June and buried within the findings were details that an alarming number of banks would lose tens of billions within the financial system yet again.
Nearly a decade since the global financial crisis that saw countless jobs, homes and savings ruined – signs show that the system is still considerably at risk.
By mandate the Fed is to be a central banking institution that encourages and sets conditions for secure banking and financial systems to exist. At its core, the central bank is meant to stabilize and grow the economy through measures such as supervising what it has labeled as banking holding companies (BHCs).
After the Dodd-Frank Act was passed in 2010, the Fed took on the responsibility to conduct stress test reports on financial firms, the select BHC’s, that maintained $50 billion plus in consolidated assets. The purpose was to see if those firms had enough money saved and whether they would be able to meet required financial levels in order to survive massive losses during stressful economic conditions.

This post was published at Wall Street Examiner by Craig Wilson ‘ July 5, 2017.