US Banks Forced To Cut Back Cash Handouts To Pass Stress Test

[Economy 52,951]

https://www.bnnbloomberg.ca/fed-stress-tests-force-some-u-s-banks-to-scale-back-dividend-plans-1.1100711

 

A large number of US banks had to cut plans to increase dividends on their stock or stock buy-back plans or even expansion plans in order to preserve cash to comply with the stress test rules that came Into effect after the financial crisis

 

The stress test makes hypothetical economic downturn senarioes and calculates whether or not a bank can withstand a relatively big downturn without going into bankruptcy

[Economy 52,951]

I don't know if here in Canada we do stress tests for banks or not tbh but we do have high Capital to Loan ratio requirements so banks have cash reserves to cover defaults that's why none of the major banks failed here in 2008/2009 although some did struggle and Government loaned a few of them money as well. They weren't bankrupt tho it was so lending wouldn't stop in the economy

 

I know there's a stress test for mortgages now. U have to qualify for a mortgage with interest rates 2% higher than the bank is offering so that if they go up later you can still afford it