Europe Hopes Tests Help Banks as They Did in U.S.

When President Franklin D. Roosevelt of the US declared a bank holiday in the United States at the height of the Great Depression in 1933, nervous investors found renewed confidence after examiners deemed many banks sound and threw their doors back open for business.

Last year, in the wake of the worst financial crisis since those dark days, American regulators gave investors a similar lift when they conducted exams showing that banks in the United States could weather a prolonged downturn — a feat that Europe is hoping to match when regulators release the results of their own tests on European banks this week, The New York Times’s Liz Alderman reports from Paris.

But unlike their American counterparts, who produced a detailed blueprint for how they would examine the 19 biggest American banks ahead of the results, Europe’s regulators have divulged relatively little about the criteria used in their stress tests. That is already sowing confusion about whether banks that pass the tests are really healthy enough to weather another downturn, analysts say.

For more: Europe Hopes Tests Help Banks as They Did in U.S. - DealBook Blog - NYTimes.com