The Wall Street Journal
March 19, 2013
The Fed’s Stress Tests Add Risk to the Financial System
Banks have a powerful incentive to get the results the Fed wants and ignore other potential dangers.
By TIL SCHUERMANN
On March 14, after the markets closed, the 29 banks that hold about three-fourths of U.S. banking assets waited to hear if they passed or failed the Federal Reserve’s annual stress tests. The results seemed reassuring. The Fed gave a passing grade to 14 and a failing grade to two, required two others to address some additional weakness by later this year, and didn’t disclose its conclusions about the 11 smaller institutions.
Stress-testing got us out of the financial crisis in May 2009, and it has since become the crisis-management ...
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