US Federal Reserve is putting the 19 biggest US financial institutions under stress test to check their stability if the economic situation worsens. Those under the stress test along with their P/E and market capitalization as on 24 April 2009 are listed below:
| Name of Finanical Institution | P/E | Market Cap (Billion USD) | Code |
| J.P. Morgan Chase & Co. | 58.6 | 125.4 | JPM |
| Wells Fargo & Co. | 7.8 | 90.8 | WFC |
| Goldman Sachs Group | 27.1 | 61.0 | GS |
| Bank of America Corp. | 12.0 | 58.2 | BAC |
| US Bancorp | 16.5 | 33.4 | USB |
| Bank of NY Mellon Corp. | 27.4 | 30.9 | BN |
| American Express Co. | 13.3 | 29.3 | AXP |
| MetLife | 6.4 | 24.0 | MET |
| Morgan Stanley | - | 23.8 | MS |
| PNC Financial Services Group | 18.0 | 19.2 | PNC |
| Citigroup | - | 17.6 | C |
| State Street Corp. | 9.4 | 16.1 | STT |
| BB&T Corp. | 9.7 | 13.1 | BBT |
| Capital One Financial Corp. | - | 7.5 | COF |
| SunTrust Banks Inc. | 18.3 | 5.7 | STI |
| Regions Financial Corp. | - | 3.9 | RF |
| Keycorp | - | 3.5 | KEY |
| Fifth Third Bancorp | - | 2.1 | FITB |
| GMAC LLC | - | - |
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The stress test which is aimed at assessing the capital adequacy of the major financial institutions under various scenarios comes under the SCAP (The Supervisory Capital Assessment Program). The banks that perform poorly under this stress test will be asked to increase their capital and will come under pressure from the investors. Fed has also released a 21 page document stating the methodology which it will use for the stress testing these institutions. The results of the test will start coming after May 4, 2009. One reason behind Fed stating the methodology 10 days in advance is to prevent any shock to the investors. The press release about the methodology was done about an hour after the closing of the US market for the weekend, thus giving analysts time to analyse and digest the information.
Resources:
The Fed's press releaseThe Fed's stress testing methodology
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