Federal Reserve’s Stress Tests: Ally Financial Only Bank That Would Have Losses

by Colonel on March 7, 2013

“Government-owned Ally Financial was the only bank that fell below a generally accepted regulatory capital standard based on initial Federal Reserve stress test results released Thursday seeking to find out if 18 of the largest financial institutions can withstand a deep recession. Specifically, the test, designed to assess whether reserves were sufficient to withstand another crisis like the credit crunch of 2008, showed that Ally … held 1.5% in capital set aside under a measure called Tier 1 common capital ratio, according to a Fed statement. That is significantly below the generally accepted standard of 5%. Two other institutions came close to falling below the 5%: Goldman Sachs Group Inc. at 5.8%, and Morgan Stanley at 5.7%. Ally would have losses of $9.3 billion, including loan losses of $4.5 billion. However, the results are based on an average of each bank’s last four quarters of dividends. The final results … will be released on March 14.

” — Ronald D. Orol, Copyright 2013 MarketWatch Inc.

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