Jenner & Block

Partner Timothy Karpoff Speaks about Results of the Government’s Stress Tests on Banks

Jenner & Block Partner Timothy A. Karpoff was interviewed on Bloomberg  Television’s “Street Smart” segment for his insight on the results of the Federal Reserve’s stress tests.  The tests indicated that the country’s 31 largest banks  have sufficient capital to absorb losses during a prolonged economic downtown.  A former US Treasury official, Mr. Karpoff explains that the stress tests are “the beginning of the process,” which includes the banks reporting their capital distribution plans this week.  He also observes that there is more to the tests than whether a bank passed or failed.  For instance, regarding the government’s increased interest in leveraged loans, Mr. Karpoff said that “as we look deeper into this, we can see did they stress leveraged loans more so than other assets and activities?  And I think it’s that kind of information that will give you an even greater sense of  how banks are going to start reacting to stress tests in the future and if they start thinking of this as the new binding capital constraint.”  Please click here to see the segment.