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The biggest banks in the nation have strong defenses guarding against an economic downturn and could even continue lending through a deep recession, according to the Federal Reserve.
The Fed’s annual “stress tests” released Thursday find some of the biggest banks have very strong capital ratios, an important measure of financial strength, and they’ve jumped noticeably from last year, the Wall Street Journal reports.
That’s good news for investors, as these strong reports from the Fed will likely allow banks to boost dividends.
Compared to previous years, a senior Fed official says the big banks entered this year’s tests with higher-quality loans and more capital. The second part of the test will be released next week, which includes decisions on whether banks will be allowed to return more cash to shareholders. [WSJ]
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