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Fed's Latest Stress Test Determines Whether Big Banks Can Withstand A Global Financial Crisis

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Can the largest lenders in the U.S. survive a major global financial crisis? The latest batch of Federal Reserve stress tests will decide.

Released last week and due April 5, the tests help determine how banks might weather an economic storm where the jobless rate jumps to 10% and corporate lending becomes difficult, Bloomberg reports. Banks that perform well may have more freedom to buy back stock and pay dividends to shareholders.

The Fed exempted most midsized and smaller banks from the most difficult portion of the test, aiming the exercise toward the largest lenders. In response to President Donald Trump’s order for a sweeping review of the Dodd-Frank Act, experts said there is uncertainty as to how these tests will be done in the future. [Bloomberg]