Tuesday, March 10, 2015

Bank Of America: Why So Much Stress Over The Stress Test?


Summary

  • BoA passed the Fed stress test, setting up increased capital return.
  • The CCAR due to be released on the 11th has an overstated importance.
  • Investors should use the weakness in the stock to load up based on valuation and not any capital return plan that is not needed to justify value.
The stress tests and corresponding CCAR, or Comprehensive Capital Analysis and Review, plans are peculiar events created out of the financial crisis. Sure, banks and the Fed need to understand the impacts of adverse economic events on capital levels, but the results under crazy scenarios unlikely to occur in our lifetime again aren't impacting actual bank results.

Read the full article on Seeking Alpha.


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1 comment:

Bank of America said...

Bank of America and the stress test this link seems to be something interesting.. whats the story behind this stress test?