Congressman Gregory W. Meeks (D-NY), a senior member of the House Financial Services Committee, released the following statement on the Federal Reserve's recent stress tests:
"Yesterday, the Federal Reserve conducted stress tests to measure the financial health of 19 major financial institutions. I have supported the stress testing of banks, and for their results to be made public, since I introduced an amendment mandating semiannual tests with Congressman Dennis Moore (D-KS) in 2009. Periodic stress tests, combined with the requirement that firms develop detailed "living wills" on how to wind down their firms in the event of a crisis, empower investors in the equity and debt markets by providing vital transparency and information to the public, and are a fundamental part of the Dodd-Frank financial reform bill.
"As Congressman Moore and I argued in 2010, had "our stress test language [been] in law a decade ago, both regulators and the marketplace would have seen how overleveraged and fundamentally risky a firm like Lehman Brothers had become and would have taken preemptive actions that could have prevented its dramatic collapse, which, in turn, ignited a financial panic.'
"The Fed's recent stress tests, the third round that has been conducted since 2009, scrutinized capital levels under certain stringent scenarios to ensure the institutions would not curb lending in the event of an economic downturn. The results, which included failing a major institution, show clearly that the Federal Reserve will not rubber stamp the exams. These results also prove the value of the Dodd- Frank law in assuring the safety and solvency of America's banking system and financial industry. The financial industry and banks are vital for America's prosperity, and I am proud to have been an ardent supporter of the efforts to keep them secure and strong."