Fed Raises the Bar on Stress Tests

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Cornelius Hurley, School of Law, Center for Finance, Law & Policy

Banks are going to have to work harder next year if they want to continue to pass the Federal Reserve Board’s annual stress test exercise…

Expert quote:

“With its stress tests, the Fed has now crossed the line from being the regulator of banks to being the manager of banks. In its effort to avoid more taxpayer bailouts, the Fed has taken upon itself the responsibility of deciding the banks’ capital levels, dividend policies and even the business lines they will engage in.”

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