Politics 8 March 2013 Stress test results: most banks fine, Goldman struggles It's not a problem though, says the bank. Sign up for our weekly email * Print HTML Bank stress tests have come round again - and almost all banks are fine. Is this a surprise? What actually goes on in a stress test? Well basically, the FED pitches banks against hypothetical economic scenarios, seeing whether they'd stand up to them - which is really testing whether they have a sufficient cushion of capital in the case of "deep global recession". So stress tests are an attempt to safeguard against another 2008 scenario. But now, a few years on from the crisis, the tests are more being used as a gateway for bank payouts. Of the 18 tested, only one failed - (Ally), and for the 17 that passed the tests will pave the way for increased dividends and share buybacks. Interesting weaknesses showed up in the case of Goldman Sachs - which finished third from last. Here's the FT: Goldman, normally renowned for its resilience, would suffer a $20bn loss in the depths of the hypothetical crisis and its ratio of core “tier one common equity” capital against risk-weighted assets would fall to 5.8 per cent, compared with a minimum requirement of 5 per cent, the Fed said. ..but the bank doesn't think this will be much of a problem: Howard Chen, bank analyst at Credit Suisse told the FT: “Importantly, we do not believe this negatively impacts our capital return assumptions." Aside from the test results themselves banks had another concern: whether other banks would jump the gun and announce plans for payouts to shareholders early, like JP Morgan did last year. Some called it a prisoner's dilemma scenario - if one bank goes, they all do. But the Fed asked banks not to make public their plans before next week's announcement. Here's the chart - also available here, amongst other details. › Without strong and accountable action... we can't move past tokenism Goldman Sachs building. Photograph: Getty Images. Subscribe from just £1 per issue More Related articles Jeremy Corbyn has found a vulnerable spot on Theresa May and trade Politicians are worried that their pensions are destroying the planet. Is yours? Nap Store: Where did all these new mattress start-ups come from?