GEAB 176
Bank failures not anticipated by bank stress tests
Recent bank failures in the US clearly raise questions about the reliability of the FED’s bank stress tests.[1]
Regulated since the subprime crisis of 2008, which shook the financial and banking sector in the United States and Europe, and the collapse of Lehman Brothers, one of the “too big to fail” banks, bank stress tests examine the resistance of banks and financial institutions to extreme systemic financial and economic disturbances. These tests, which involve various crisis scenarios and financial and economic shocks, are carried out every year by central banks (the FED in the US and the ECB in the EU)[2] and enable them to identify the vulnerabilities of banks and financial institutions and the systemic risks (contagion of the system) and, of course, to deal with them “early on”, in particular by taking measures to increase capital or restructure. The recent bank failures in the US and the rescue of Crédit Suisse through its forced takeover by UBS demonstrate the fragility of this system.
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