The nation's largest banks breezed through the first phase of their annual stress tests Thursday, demonstrating that they have enough capital to withstand the type of financial shock that nearly ruined the industry and the world economy in 2008.
The banking system, according to the Federal Reserve's test results, has an even larger capital cushion than it did going into last year's exam. That is likely to increase calls from the financial industry and its allies in the Trump administration and Congress to start watering down the regulations. Even the Fed governor overseeing the tests this year has said he wants to pull back some rules.
The stress tests, which were introduced early in the Obama administration and are required by the 2010 Dodd-Frank financial overhaul, are intended to ensure that banks have enough capital to cover severe losses such as those during the mortgage crisis and to avoid another taxpayer-funded bailout.
Bank executives have complained that regulators have unduly required banks to pile on capital that they could use to lend to small businesses and homeowners. The required capital buildup has also squeezed the industry's profits, which can cut into bankers' pay and bonuses.
Business on 06/23/2017