4 of 19 Banks Fail ‘Stress’ Test

Daily Real Estate News | Wednesday, March 14, 2012

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Four of the the country’s 19 largest banks do not have enough capital to withstand another economic downturn, if one occurs, according to the Federal Reserve’s latest stress test for banks.  

The four banks at risk named in the report are Citigroup, SunTrust, Ally Financial, and MetLife. 

The hypothetical stress test, conducted annually by the Federal Reserve but not usually released publicly, analyzes if banks could weather the storm if the economy saw a 21 percent reduction in home prices, 13 percent unemployment, and a 50 percent drop in stock prices. The test aims to see which banks would be able to continue to lend money to individual and businesses even if such catastrophic losses occurred. 

For any banks that fail the stress test, the Fed can force them to raise money, such as by selling additional stock or issuing debt. 

For the banks that did pass, they are able to raise their dividends and take action in luring more investors to their stocks. This year’s results are “clearly good news — the U.S. banking system can now withstand a quite severe recession without falling over,” Douglas Elliott, a fellow at Brookings Institution, told the Associated Press. Among the banks that passed the stress test are U.S. Bancorp, JPMorgan Chase, and Wells Fargo.

Source: “Federal Reserve Annual Stress Test Fails 4 of 19 Big Banks,” The Associated Press (March 12, 2012)

Pricing your home realistically will most certainly get potential buyers through the door, but how do you get them to fall in love with the home? A recent article at U.S. News & World Report offers some of the following tips for sellers in enhancing their home’s appeal. 

1. Add curb appeal: “Make sure the house is cleared of winter clutter, that windows are washed, that the front door is painted or clean,” says Brad Knapp, regional vice president for the National Association of REALTORS® for Ohio and Michigan. “You have to give the house good curb appeal.”  
2. Declutter: Remove clutter from the home so that buyers can actually see what all the home has to offer. Any excess belongings of the sellers should be stored in the garage or in a storage unit. 
3. Be careful not to offend: “Hunters and fisherman often have game hanging on the walls,” Knapp notes. “Some people are offended, so get that off the walls and into the garage.”
4. Consider staging: “It might behoove [sellers] to hire a professional stager to help them,” says Robert Simon, a professor at Cleveland State University. “You have to get it right so it looks lived in, but definitely not cluttered.”
5. Complete routine maintenance: Make sure your sellers complete any routine maintenance projects before the home is listed. Also, sellers need to realize that “people don’t care if you spent $15,000 fixing the roof. It’s worth nothing,” Simon says. “The market expects the roof to be in tip-top shape. You have to go above and beyond.”