US launches ‘stress test’ for big banks

WASHINGTON: The United States launched a “stress test” programme to judge banks’ resistance to a possible deeper recession, as investors await President Barack Obama’s budget proposal to see what support it will give the economy.

The US stress tests, mandatory for the roughly 20 institutions that each have over US$100bil in assets, will be used to determine whether they need more capital from a new US Treasury programme for government preferred stock investments that can be converted into common equity.