2013/3/7 - PULSE: Ally only bank below Fed standard in stress test

WASHINGTON (MarketWatch) - Government-owned Ally Financial was the only bank that fell below a generally accepted regulatory capital standard based on initial Federal Reserve stress test results released Thursday seeking to find out if 18 of the largest financial institutions can withstand a deep recession. Specifically, the test, designed to assess whether reserves were sufficient to withstand another crisis like the credit crunch of 2008, showed that Ally, the former GMAC, held 1.5% in capital set aside under a measure called Tier 1 common capital ratio, according to a Fed statement. That is significantly below the generally accepted standard of 5%. Two other institutions came close to falling below the 5%: Goldman Sachs Group Inc. GS at 5.8%, and Morgan Stanley MS at 5.7%. Ally would have losses of $9.3 billion, including loan losses of $4.5 billion. However, the results are based on an average of each bank's last four quarters of dividends. The final results, which will be released on March 14, could change significantly for some banks because they are based on each institution's proposed capital distribution plans, including dividends and share buybacks, for the next 12 months. The Fed makes clear that banks cannot pass or fail Thursday's test because the thresholds do not count this time.