The New York TImes is reporting that the Federal Reserve has confirmed mistakes were made while scoring the bank stress tests.Corrections have been made for Citigroup, Bank of America, Ally Financial, MetLife and Wells Fargo.
From the NYT’s Peter Eavis:
The Fed also issued corrections for Bank of America, Ally Financial, MetLife and Wells Fargo. It said the corrections don’t change the capital ratios projected by the stress tests, which estimated the losses that a bank can bear amid scenarios that include a severe recession and a market meltdown.
In the original test results, the Fed projected losses on Citigroup’s first-lien home loans that would be equivalent to 9.7 per cent of its total mortgages. But the Fed now says that the loss rate is 9.3 per cent. The change occurred after the Fed moved projected losses on Citigroup’s foreign mortgages to another category. As a result, the 9.3 per cent loss rate is just for mortgages in the United States.