Biggest U.S. banks seen weathering severe stress in Fed test

FEDERAL RESERVE Vice Chairman Stanley Fischer said a recent patch of weak economic data likely won’t throw the U.S. central bank off track for two more interest-rate increases this year.
FEDERAL RESERVE Vice Chairman Stanley Fischer said a recent patch of weak economic data likely won’t throw the U.S. central bank off track for two more interest-rate increases this year.

PROVIDENCE – The Federal Reserve last week found all 33 of the country’s largest financial institutions had enough capital should the economy turn down, including Bank of America Corp., Banco Santander SA’s U.S. division and Providence-based Citizens Financial Group Inc.
But it’s not over.
The central bank’s annual health check, Comprehensive Capital Analysis and Review, popularly referred to as the Fed’s “stress test,” started three years ago. In two examinations, it determines whether these financial institutions are well-capitalized to withstand harsh economic conditions and if it maintains the appropriate internal risk controls.
Bank of America, Santander and Citizens, three of the largest banks in Rhode Island, are among the 33 tested by the Fed. Each one passed the first part of the test last week.
The second part of the test, however, is what’s given banks trouble in the past. Last year, Santander was one of two financial institutions to fail the second part of the test, showing weak internal risk controls, and Bank of America had to resubmit plans demonstrating improved risk controls and capital planning.
The Fed has indicated it will release CCAR results on Wednesday.

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