Even banks think they live in a world of too much stress
Marketplace All-in-One
Marketplace
4.5 • 1.4K Ratings
🗓️ 26 December 2024
⏱️ 7 minutes
🧾️ Download transcript
Summary
The Federal Reserve guides interest rates and is one of several regulators of the nation’s banks. Now, the banking industry is suing over the way the Fed conducts its annual stress tests, which are designed to measure banks’ resilience in case of a bad financial shock. We’ll hear more. Plus, Yelp celebrates its 20th year, and the passion of soccer fans provides a lesson in behavioral economics.
Transcript
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| 0:22.4 | Marketplace.org slash donate or follow that link in the show notes. |
| 0:28.4 | Even banks think they live in a world of too much stress. |
| 0:33.0 | I'm David Brancaccio. |
| 0:34.5 | The many sides of our central bank, the Fed Guides Interest rates, and it's one of several regulators of the nation's banks and the industry is now suing the Fed over the way the central bank conducts its annual stress tests, which are designed to measure banks' resilience in case of a bad financial shock. Here's Marketplace's Nova Sopho. |
| 0:53.3 | Bank stress tests ensure they have enough cash on hand to pay out depositors in case of financial shock. Here's Marketplace's Nova Sopho. Banks stress tests ensure they have |
| 0:55.0 | enough cash on hand to pay out depositors in case of financial trouble. But the industry has long |
| 1:00.4 | complaint that the Fed is forcing them to set aside too much in reserves. Banks also say |
| 1:05.4 | the tests are carried out in an opaque fashion, with the results volatile from one year to the next. |
| 1:11.5 | In their lawsuit, |
| 1:17.3 | they want the Fed to open up its process, to publicly reveal the models it uses, and to take feedback from the industry itself. In an apparent effort to head off the lawsuit, the Fed said |
| 1:22.3 | it would seek public comment on changes to improve transparency, but banking groups decided to file their lawsuit |
| 1:28.6 | anyway. Earlier this year, the Fed subjected 31 big banks to its annual tests. After passing, |
| 1:35.1 | banks hiked dividend payouts to shareholders, and J.P. Morgan Chase instituted $30 billion |
| 1:41.1 | in share buybacks. I'm Noviceoffa for Marketplace. |
| 1:45.7 | Yellow pages plus help equals Yelp, a review site that is turned 20. |
| 1:51.0 | Megan McCarty Carrino from our Marketplace Tech program has more on the transformation of reviews online. |
| 1:57.8 | The site has now accrued almost 300 million reviews worldwide. And it's helped usher in our |
| 2:04.0 | current star-saturated era, says David Goddus, a marketing and economics professor at Johns Hopkins. |
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