Big U.S. banks have enough capital buffers to withstand a drastic economic downturn, the Federal Reserve said Thursday, announcing that 29 out of 30 major banks met the minimum hurdle in the Fed’s annual health check.
All of the big banks except Zions Bancorp stayed above the 5 percent requirement for top-tier capital in the latest round of stress tests.
The tests aim to show how banks would weather a financial collapse similar to the 2007-09 crisis. Banks had to show how they would cope with a halving of the stock market, and the eight largest banks had to weigh the impact of the default of their biggest trading counterparty.
Stress tests are closely watched by financial markets as a sign of the industry’s health, and also because the Fed can reject a bank’s plans to return capital to shareholders if it thinks the bank is not strong enough.
The Fed will announce on March 26 which banks’ plans to pay dividends or buy back shares were approved.
Zions, based in Salt Lake City, was the only bank to miss the minimum, with a tier 1 capital ratio of 3.5 percent in the most severe stress scenario. A spokesman for Zions was not immediately available for comment.
The other 29 banks stayed above the minimum levels. But M&T Bank came in relatively low, at 5.9 percent, and Bank of America’s tier 1 ratio was 6 percent.
Bank of New York Mellon, Discover Financial Services and State Street had the highest capital ratios. Discover announced shortly after the release of the results that it planned to increase its quarterly dividend.
Mary Barra, chief exeuctive of General Motors, is scheduled to testify April 1 to a House panel investigating the company’s long-running problem with defective ignition switches that have been linked to 12 deaths, the committee said late Thursday.
House Energy and Commerce Committee leaders also said they had invited David Friedman, acting head of the National Highway Traffic Safety Administration, to testify at the hearing.
This will be the first in what could be a series of hearings by the House panel, which began an investigation after GM’s decision to recall 1.6 million of its vehicles because of the ignition problem that first surfaced more than a decade ago.
While the ignition defect began long before Barra and Friedman assumed their current positions, their testimony “will be essential to getting answers about what went wrong,” committee Chairman Fred Upton (R-Mich.) said.
The hearing will be conducted by the panel’s oversight and investigations subcommittee.
● A federal judge approved a deferred prosecution agreement with Toyota Motor that resolves an investigation into safety issues. U.S. District Judge William Pauley’s decision, delivered at a hearing in New York, came a day after the Justice Department announced that Toyota would pay $1.2 billion to resolve the investigation stemming from problems that caused cars to accelerate suddenly. The judge said the case presented a “reprehensible picture of corporate misconduct.” Toyota faces almost 400
wrongful-death and personal-
injury lawsuits over the acceleration problem.
● Twitter users in Turkey reported widespread outages Friday, hours after Prime Minister Recep Tayyip Erdogan threatened to shut down access to the social media platform as he battles a corruption scandal. Some users trying to open the Twitter Web site were taken to a statement that apparently was from Turkey’s telecommunications regulator. The statement cited four court orders as the basis for blocking the site, where some users in recent weeks have posted voice recordings and documents purportedly showing evidence of corruption in Erdogan’s inner circle. “Twitter, mwitter!” Erdogan told thousands of supporters late Thursday at a rally ahead of March 30 local elections, in a phrase translating roughly as “Twitter, schmitter!” Twitter spokesman Nu Wexler said that the microblogging service was “looking into this now,” without saying whether an outage had occurred in Turkey.
● Average U.S. rates on fixed mortgages declined last week, with the average rate for the 30-year loan falling from 4.37 percent to 4.32 percent, mortgage buyer Freddie Mac said. The average for the 15-year mortgage eased from 3.38 percent to 3.32 percent.
● Sales of existing homes slipped in February to their lowest level since July 2012 as severe weather, rising prices and a tight supply of homes discouraged buyers. The National Association of Realtors said sales declined 0.4 percent last month to a seasonally adjusted annual rate of 4.6 million. It was the sixth decline in the past seven months.
● Time Warner Cable chief executive Rob Marcus stands to make about $80 million if Comcast’s deal to buy Time Warner Cable closes, according to a regulatory filing. Marcus will receive about $20 million in cash, a $2.5 million bonus if certain targets are met and $56.5 million in equity. Comcast has agreed to buy the No. 2 cable provider in the United States for $45 billion.
● The Arkansas Supreme Court tossed out a $1.2 billion judgment against Johnson & Johnson, reversing a lower court verdict that found the drugmaker engaged in fraudulent tactics when marketing the antipsychotic drug Risperdal. The high court ruled that the state’s Medicaid fraud law, which formed the basis of Arkansas’s lawsuit, regulates health-care facilities and that drug manufacturers, including Johnson & Johnson and its subsidiary, Janssen Pharmaceutical, don’t fall under its scope.
— From news services
● Earnings: Darden Restaurants, Tiffany & Co.