The Consequences of Citigroup’s Failed Stress Test

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March 27 (Bloomberg) -- Citigroup’s capital plan was among five that failed Federal Reserve stress tests, while Bank of America won approval for its first dividend increase since the financial crisis. Bloomberg's Michael Moore takes a look at the results on Bloomberg Television's "Bottom Line." (Source: Bloomberg)

Michael moore.

What are the consequences for city after failing this test?

Greg city wanted to do a $6 billion buyback and you finally raise its dividend.

It has been at one sense since the crisis.

They wanted to -- one cents since the crisis.

They wanted to raise it two five cents.

That is not going to happen.

That is a big hit for them not being able to pay out that extra capital.

It is a big hit for the stock.

Do they have to rejigger units or is this getting into the weeds of how they estimate certain businesses?

It is how they estimate certain laws says in a stress scenario.

If there was a crisis, how confident are they and what they can control.

It is more on that side than the business side, but for a shareholder, it is big because the banks are not seeing a lot of revenue growth.

And you one return of capital.

You want a dividend if you are not going to be in a growth stock.

Let's talk about bank of america and goldman sachs.

They both had to resubmit their plans.

Were they overly confident?

Yes, and i think it is because in their own internal stress test they did a lot better than what the fed said they did.

A lot of that was given the assumption that they were going to shrink if there was another crisis.

The fed said no, historically, banks get bigger during a crisis i buying something or through gross.

That kind of drove their ratio down.

The first time around, they had to lower their target and ask for a little bit less.

Quickly, what was the number one takeaway you had from the results of these tests?

Even though the banks have tremendously increased their capital, they have doubled their capital since 2009, they can still run into issues.

We have seen the fed step up its focus on the qualitative side.

Citigroup would pass easily on the #, but the fed still has some questions.

Thank you so much.

We are looking forward to more

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