20% of USA big banks fail stress test

Only 15 of 19 pass:

The strength of banks’ loan books varied greatly. Under extreme stress, the Fed said, Citigroup would lose 9.7 percent of its first mortgage loans, more than any other bank. Both Wells Fargo and PNC would suffer losses of at least 9 percent. 

In business loans — called commercial and industrial loans by bankers — Citi and U.S. Bancorp had the worst portfolios, while Wells Fargo and Fifth Third had the shakiest credit card portfolios. In commercial real estate, regional banks appear to be the most vulnerable. Under the Fed’s test, Fifth Third would suffer losses of 11.3 percent of its loans, with Regions Financial the only other bank expected to lose at least 7 percent of its loans. 

Bank of America could serve as an important litmus test for whether the market has confidence in these results. In most troubled outlooks, the firm’s capital levels remained above the Fed benchmarks. But the bank has large holdings of home loans, which could still expose it to further losses. 

“The tests showed that those who didn’t fare as well have a lot of vulnerability to the residential mortgage market,” said Mr. Scanlon of Manulife.

Good news? YES: If a democrat is president.