Analysts expressed shock that Citigroup, the nation’s third largest bank, received a failing grade from the Federal Reserve’s annual stress test. But its poor showing would only confirm investor sentiment of Millionaire households surveyed by Millionaire Corner. In a 2011 fourth quarter wealth level study, only 6 percent said they would be likely to start or increase usage of Citigroup.
Likewise SunTrust Banks, which also received the lowest grade. Only 6 percent of Millionaire households we surveyed said they would start or increase usage of this bank.
On Wednesday, the Fed said that 15 of 19 banks would be able to “continue to meet supervisory expectations for capital adequacy despite large projected losses in an extremely adverse hypothetical economic scenario.” This “deliberately stringent” stress scenario includes a 13 percent unemployment rate, a 50 percent drop in equity prices, and a 21 percent decline in housing prices.
The banks that fared best include: American Express; BB&T; Bank of America Corporation; The Goldman Sachs Group; Bank of New York Mellon; Fifth Third Bankcorp; Capital One Financial Corporation; Fifth Third Bankcorp; JP Morgan Chase; Keycorp; Morgan Stanley; The PNC Financials Services Group, Inc; Regions Financial Corporation; Street State Corp.; U.S. Bankcorp; and Wells Fargo & Company.
Of the banks who passed the stress test with flying colors, Wells Fargo is held in highest esteem by investors we surveyed. Thirty-nine percent said the bank was likely to fulfill its needs. Twenty-nine percent cited Bank of America, 28 percent JP Morgan Chase, and 26 percent BB&T.
Goldman Sachs, the talk of Wall Street on Thursday following a scathing New York Times Op-Ed written by Greg Smith, head of the firm’s U.S. equity derivatives business in Europe, the Middle East and Africa, only received an 11 percent vote of confidence by investors that it would meet their needs.
Conversely, 29 percent did say that Citgroup was likely to fulfill the needs they have.
Donald Liebenson writes news and features for Millionaire Corner. He has been published in the Chicago Tribune, The Chicago Sun-Times, The Los Angeles Times, Fiscal Times, Entertainment Weekly, Huffington Post, and other outlets. He has also served as a marketing writer for Chicago-based Questar Entertainment and distributor Baker & Taylor.
A graduate of the University of Southern California, he is married with a college-age son. He also writes extensively about entertainment.