The results of the Federal Reserve's latest stress tests presented rather positive results showing that the banking industry is stronger than it was before the financial crisis and that it can withstand market shocks. 30 out of the 33 banks that passed the tests will be distributing a whopping $96bn of payouts to shareholders. This can in turn raise consumer trust in the banking industry and it's ability to absorb potential losses if the markets take a turn for the worst again.
“Notwithstanding the failure of a couple of institutions [this year], the ultimate effect of all this is a safer and stronger banking system,” says Ernie Patrikis, a partner at White & Case and a former senior official at the New York Fed. The payout approvals from the Fed give a much-needed boost to banks and their investors, which are grappling with low interest rates and a wave of post-crisis regulation.