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US Banks Passed the Latest Stress Test, But Are Still Unhappy

The regulatory checkups by the Federal Reserve are one reason no one’s talking about a financial crisis today.
JPMorgan Chase & Co. CEO Jamie Dimon.

JPMorgan Chase & Co. CEO Jamie Dimon.

Photographer: Eric Tschaen/Abaca/ ZUMA Press

Wall Street loathes bank stress tests—and arguably owes a lot to them. The regulatory checkups by the Federal Reserve, instituted after the 2008 global financial crisis with the aim of averting another one, run banks’ balance sheets through simulated doomsday scenarios to gauge whether they’d make it through. This year banks were tested on a hypothetical cocktail of surging unemployment, collapsing real estate prices, and a plunge in stocks.

All 33 of the biggest lenders in the US passed this year’s exam. But the results chafed some of them. JPMorgan Chase & Co. and Citigroup Inc. were told that in the future they would need to increase the amount of high-quality capital they hold to protect against losses, and as a result they will be pausing stock buybacks that return money to shareholders.