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The Fed is set to release the results -- its latest stress test on the banks my next guest says may not afraid taught -- minute of Sterne -- joins me now.
So what's gonna happen today at 430 and then when we find out all the results right tonight in his face -- two step process this year which is very different process from the years.
Past continues to of -- Or getting tonight simply is the Fed model.
Under a stress scenario if you -- well for all of the eighteen banks.
Basically it it's one stress scenario how to the bank stack up against each other on a number of various financial metrics.
But it's really kind of a precursor to the big day a week from now.
When we're really gonna find out what of the capital distributions going to be what the dividends distributions going to be tonight as you step precursor.
What investors' appetite so to speak OK -- -- on what may be the weakest player I guess who might be Citi what do you expect to come out of Citi in terms -- -- results were pretty positive on Citi going in next week we think it.
You know Citi.
Bank of America for that matter I think we're finally at a point where it improving credit quality improving profitability.
These companies are now on a position to start thinking about returning -- to shareholders.
We believe the boat that Citigroup in particular it's gonna get announced -- the share buyback as well the dividend increase.
Which are going to be very encouraging very positive news for averse investors would make -- think they're no longer having a near death experience -- Citi.
Now where -- stand on the nineteen biggest banks that took TARP pay back every dollar plus interest.
Are they allowed to raise dividend payments -- Dubai debt buybacks as they wanted to they have to go first hat in hand and get permission from their overseers at the Fed who themselves and never really been bankers to process is purely driven by the Fed.
It's a completely different world today than where it was a couple years ago.
Every single year the Fed's going to have to sign off on what the proposed does distributions are going to be when that's dividends whether that's capital.
This is now an annual program what we're seeing tonight in fact is a function or derivative of the Dodd-Frank act right now you have to component you have the Dodd-Frank.
Plus you have the defense program Todd doesn't this -- Bother you any anyway JPMorgan Chase might be one of the strongest banks in the entire world OK even after they lost a couple billion on the whale trader.
And yet they've got to go ask permission from the Fed.
On what they do and pay back money that belongs to the shareholders if the fat.
There is something wrong with that and in fact my belief is in three to four years from now you're gonna see very different process meaning.
A process where we're not gonna go through this annual.
You know and gymnastics in terms of can you do what can you not do it.
It it's very it's a very onerous process as it relates to both the banks and it really keeps investors quite skittish in terms of how we invest in these things when I'm not going to know year year to year.
Where these things are going to stand in terms of distribution.
You know my dividend and so forth.
Okay 22 last really quick questions first these stress test if they've been applied -- 607.
Would they have prevented the big meltdown when they spotted the that the weaknesses.
Now I think that's so what are we -- and then second which of these banks if you had to guess has a downside risk here -- to come up with a disappointing report that sends shares down.
What would be.
The good the one bank that I I I believe investors are are very split and divided on right now is Bank of America -- Bank of America.
As you know has been struggling for a number of years they failed the test the couple years ago.
-- these yet to kind of return meaningful level of capital to shareholders very.
Token dividend right now and they're the ones that I believe on the -- -- that's a pressure point through nice job thanks for bird forest Todd Hager and appreciate it.
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