Page 24 - ARUBA TODAY

Friday 23 June 2017 BUSINESS
A24

Fed: Biggest US banks strong enough to withstand recession

By MARCY GORDON if it took those dividend or tests were performed.
AP Business Writer stock actions. Banks coming closest to
WASHINGTON (AP) — All In the first round, under the not meeting the minimum
of the 34 largest U.S. banks tests’ hypothetical “severe- capital ratio were Ally Fi-
are fortified enough to ly adverse” scenario, the nancial, with a tested level
withstand a severe U.S. U.S. would endure a cata- of 6.5 percent; Capital One
and global recession and strophic recession in which Financial, with 7.0 percent;
continue lending, the Fed- unemployment — now at Huntington Bancshares, 7.0
eral Reserve said Thursday. 4.3 percent — reached percent; KeyCorp, 6.8 per-
The first round of the cen- at least 10 percent, home cent; and SunTrust Banks,
tral bank’s annual “stress prices dropped 25 percent, 7.1 percent.
tests” showed that as a the stock market plunged The “severely adverse”
group, the 34 big banks about 40 percent and mar- scenario showed $100 bil-
have gained strength ket volatility rose sharply. lion in projected losses from
thanks to a steadily recov- The tests compare the loss- credit card loans for the
ering economy. The banks es projected for each bank banks. It was the first time
undergoing the seventh In this Thursday, March 16, 2017, file photo, a customer enters a with its capital. the tests showed losses
annual check-up included Citibank branch, in New York. The Fed said Thursday from credit card loans rising
JPMorgan Chase & Co., Associated Press that under that scenario, to an equal level with losses
Bank of America Corp., the 34 banks would suffer from commercial and in-
Citigroup Inc. and Wells combined loan losses of dustrial loans, the Fed said.
Fargo and Co. — the four Powell said in a statement. fund to stabilize hundreds $383 billion. That’s down With $100 billion each, the
biggest U.S. banks by as- “This would allow them to of banks, large and small, from $526 billion in losses two categories represent
sets. lend throughout the eco- across the U.S. for 33 banks last year. The about 52 percent of the to-
The banks were tested to nomic cycle, and support Nearly nine years on, bank- Fed said the losses would tal $383 billion in projected
determine if they have households and businesses ing industry profits have reduce the banks’ high- loan losses.
large enough capital buf- when times are tough.” been steadily rising and quality capital from 12.5 All the banks can now
fers to keep lending, even The tests were mandated banks have been lending percent of its loans in the amend their plans on divi-
if hit with billions of dollars by Congress in the wake more freely. fourth quarter last year to dend payments and stock
in losses brought on by a of the crisis that plunged The most critical tests for 9.2 percent at the end of buybacks to win Fed ap-
financial crisis and severe the U.S. into the worst eco- the industry come next 2017. The 9.2 percent level proval before it announces
economic downturn. Cap- nomic downturn since the week. That’s when the Fed shows improvement from its decisions on those issues
ital is the cushion a bank Great Depression of the will announce whether it last year’s 8.4 percent. It’s next Wednesday. Increas-
holds against losses. 1930s. They were designed has approved banks’ re- far above the 4.5 percent ing dividends costs mon-
“This year’s results show to restore badly shaken quests to increase divi- minimum capital level and ey and the government
that, even during a severe confidence in the U.S. fi- dends or buy back shares. the 5.5 percent that the doesn’t want banks to
recession, our large banks nancial system. During the Those results will be based banks held at the start of shrink their capital reserves,
would remain well capi- crisis, the government cre- on how each bank would 2009, soon after the crisis making them vulnerable in
talized,” Fed Gov. Jerome ated a $700 billion bailout fare in a severe recession hit, the year the first stress another recession.q

U.S. stock indexes hold steady as oil’s dismal week eases

By STAN CHOE been dominated by oil’s
Traders John Panin, left, and AP Business Writer tumbling price and worries
Michael Casey work on the NEW YORK (AP) — U.S. about how much it will af-
floor of the New York Stock stock indexes held steady fect the broader market.
Exchange, Thursday, June 22,
2017. Thursday after the price of Benchmark U.S. crude rose
oil halted its slide, at least 21 cents to settle at $42.74
for now. per barrel, and Brent crude,
Energy stocks fell again, the international standard,
but not by nearly as much added 40 cents to $45.22
as earlier in the week, after per barrel.
crude rose for the first time It may not sound like much,
in four days. but it’s a big shift in mo-
Big gains for health care mentum from earlier in the
stocks also helped to offset week, when oil dropped to
losses for financial compa- its lowest level since August
nies and other areas of the on expectations that sup-
market, leaving indexes plies will exceed demand.
close to flat. Energy stocks in the S&P 500
The Standard & Poor’s 500 dipped by 0.1 percent, a
index edged down by 1.11 much milder drop than the
points, or less than 0.1 per- prior two days, when they
cent, to 2,434.50. The Dow fell at least 1.2 percent.
Jones industrial average Helping to support indexes
dipped 12.74, or 0.1 per- were health care stocks,
cent, to 21,397.29, and the which have been shoot-
Nasdaq composite index ing higher this week even
rose 2.73 points, or less than as the rest of the market
0.1 percent, to 6,236.69. struggled. q
Markets this week have