Annual Stress Test Getting Stricter for Big Banks

The annual “stress test” that big banks undergo may be getting stricter.  The tests came about after the financial crisis of 2008 in order to allow the Federal Reserve to check the health of banks and prevent a recurrence of the crisis.  The Federal Reserve is discussing increasing the amount of capital banks must have in order to protect themselves from losses.  The stricter test may encourage banks to become smaller and less prone to engage in the type of risk that led to the financial crisis.


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