09/16/2013 06:51 pm ET Updated Nov 16, 2013

U.S. Banks Say They Are Now Safer (By Their Own Measure)


By Lauren Tara LaCapra and Peter Rudegeair

NEW YORK, Sept 16 (Reuters) - The biggest U.S. banks, including JPMorgan Chase & Co and Bank of America Corp , said that by their own reckoning they are better equipped to withstand a shock to global markets and economies now than they were in March.

The results of internal stress tests released on Monday may have been helped by the banks having built capital levels in recent months as the economy showed some signs of improvement and they earned more money.

But analysts were skeptical of the tests' results, saying that higher capital ratios and lower loss projections may be less meaningful than they appear. In many cases they are not directly comparable to the tests the banks disclosed in March, known as "stress tests," which were more closely overseen by the U.S. Federal Reserve. Banks were permitted to craft their own assumptions about what would happen in a global downturn, and their scenarios may differ from the Fed's.

"Someone could pass this and fail the stress test," said Moshe Orenbuch, a bank analyst at Credit Suisse.

Both the self-tests and the Fed's review are performed by the 18 largest U.S. banks with at least $50 billion in assets, and are required by the Dodd-Frank financial reform law.



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