US Banks pass stress test but questions remain.....

15/3/15

Irwin Stelzer's "American Account" in the Sunday Times (Business, p.4) details the relief that last week all 31 of the largest banks passed the Federal Reserve Board's tests designed to ensure that they're in much better shape to cope with the next financial crisis than they were last time round. There's comfort to be taken in that for sure, but the tests assume that the next meltdown will take the same form as the last one  ---  which it almost certainly won't. Then there's the problem of increased regulation inhibiting bank lending, and of the structure of the banking industry itself (8 banks hold 60% of all assets in the system). Most fundamentally of all, the Fed seems unconvinced that ethical standards have significantly improved within the industry.