A bank stress test shows how well a bank will do if times get tough. It's a financial EKG of sorts. A whole bunch of fictitious scenarios are created, and your bank is put through the ringer. Banks that hold assets of $50 billion and up must submit to stress tests run by the Federal Reserve on an annual basis. The stress itself would come from a run on the bank where some form of panic makes its holders run to the bank asking to withdraw all their deposited cash. It's this panic that almost killed the banking system in the 20's and set off the Great Depression, when everyone lost trust in pretty much everything. The Fed stimulates the economy by loosening stress tests for banks, and fights inflation by tightening those stresses.
They're kind of the Richard Simmons meets Equinox of financial health.
Related or Semi-related Video
Finance: What is a member firm? (as oppo...6 Views
Finance allah shmoop What is a member firm Well so
what's the big club here Skull and bones No alphabetic
I know order of the phoenix No And our apologies
to this is rowling There it's one of the more
exclusive clubs on wall street A member firm is a
broker dealer where in at least one of the key
people who run the firm is a member of the
new york stock exchange or of another major exchange or
clearinghouse corporation or a player in an s r o
a self regulatory organization like you know finn ra or
see bob or one of dozens of other org's with
mysterious sounding acronyms and that's basically it The key here
is that your firm has somebody who's connected wired a
player in a not new york mafia kind of way
either and that they're able to trade on the exchange
floor giving their firm you know a handy leg up
and just a side note This club is also a
biggie on wall street but well you've got to be
over twenty one and have a keen appreciation of finance 00:01:05.984 --> [endTime] funds to get in that's the shmoop club
Up Next
A merchant account is a banking account owned by...a merchant, i.e. someone selling something. Or just someone with a few grand in the bank and dec...
What is a merchant bank, and how many duck puns do we make in this video? Watch it for the answers to both those hard-hitting questions.
What is a street name? Main, First, Broadway, Sesame...oh. What's a street name in the financial world? Hit play to find out.