Fed Sees Goldman, JPMorgan Overvaluing Capital Strength
Bloomberg reported that Goldman Sachs, JPMorgan Chase and Morgan Stanley lagged behind peers in a key measure of capital strength used by U.S. regulators to stress-test their resiliency in a severe recession.
Bloomberg said the three firms submitted more-optimistic estimates of their capital strength and ability to avoid losses on trading and lending than Federal Reserve projections released yesterday for the 18 biggest U.S. banks. Of the three, the gap was widest for Goldman Sachs, which predicted that its Tier 1 common ratio may fall as low as 8.6% in a sharp economic downturn, compared with the central bank’s 5.8% estimate.
To read the entire Bloomberg story, click here.