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Public Private Stress Test Partnerships (PPSTP)

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Competition between stress tests is heating up even as we type this entry. Not content to wait for indeterminate periods on sketchy results of questionable value, some aspiring outsourced regulators have designed their own stress tests. Early results are as daunting as their methodologies are mysterious and, of course, the most dramatic predictions tend to draw the most headlines. Like those on Dealbreaker, for instance. To wit:

U.S. banks may need another $1 trillion in capital to cushion losses as unemployment rises and borrowers fall behind on payments, KBW Inc. analysts led by Frederick Cannon said today.
The estimate is based on the analysts' own "stress test" of the strength of top U.S. lenders, Cannon wrote. The government is also evaluating the ability of banks to withstand a deepening recession. Bank of America Corp., the largest U.S. lender by assets, may be forced by the government to accept additional aid by converting preferred shares into common stock, Cannon said.

Banks May Need $1 Trillion After U.S. Tests, KBW Says [Bloomberg]


Bank Of America Hoping Someone In HR Knows How To Pass A Stress Test

Otherwise Brian Moynihan may have to dust off that C.V.

By Ryan McGilchrist [CC BY-SA 2.0 ], via Wikimedia Commons

New For 2019: No-Stress Stress Tests

Even Deutsche Bank won’t have to cram for this one.