All but one bank failed the NYU stress tests, but the Fed policymakers don’t want the public to freak out after seeing how many risks the big banks are taking so soon after the recession.
Fort Worth, TX (PRWEB) March 22, 2014
At least one U.S. gold coin dealer is less than pleased with the Federal Reserve’s requisites for banks that wish to pass stress tests, and a spokesman for Fort Worth-based GoldCoin.net believes similar tests conducted using a tool created by NYU professors is more accurate in determining a bank’s risk of collapse. GoldCoin.net spokesman Keith Kelly said from his office in Texas on Friday that the Fed’s tests set the bar too low and fail to account for various circumstances that could play out in real life.
“The Fed says participating banks must maintain a leverage ratio of four percent or more, which means they need at least $4 in capital for every $100 in assets,” Kelly said. “A healthy bank should never come close to that figure.”
Additionally, the NYU tool factors in real-life situations such as the possibility of rising interest rates and the idea that paranoia could spread to other banks if one bank failed.
“The Fed’s stress tests take place in a vacuum, and the NYU tool allows us to see what could really happen,” Kelly said. “According to a March 19th Bloomberg News article All but one bank failed the NYU stress tests, but the Fed policymakers don’t want the public to freak out and that’s what they would do if they were aware of how many risks the big banks are taking so soon after the recession.”
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