WASHINGTON, D.C.— Today, Better Markets released a fact sheet ahead of a House Financial Services Committee hearing on bank stress testing and the Federal Reserve’s release of its annual stress test results, both scheduled for tomorrow. Shayna Olesiuk, Director of Banking Policy, released the following statement.

“Done right, stress testing the biggest banks for various scenarios that could cause failure is one of the most important regulatory actions to prevent bank failures, crises, contagion, and taxpayer funded bailouts of Wall Street’s biggest banks. Done wrong, stress tests give false comfort, make crashes and bailouts more likely, and endanger Main Street families, businesses, and community banks.

“If a bank has enough capital to absorb its own losses, then it won’t fail, cause a crisis, or require a bailout. Stress tests are what inform regulators, the banks, and the public whether banks in fact have enough capital to withstand severe yet plausible stress events without requiring a bailout or other government assistance to survive. By weakening stress tests in recent years, the Fed (often with other banking regulators) has made the financial system and the economy much more vulnerable to the threats that large banks present.”

You can find the fact sheet here.

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Better Markets is a non-profit, non-partisan, and independent organization founded to promote the public interest in the financial markets, support the financial reform of Wall Street and make our financial system work for all Americans again. Better Markets works with allies—including many in finance—to promote pro-market, pro-business and pro-growth policies that help build a stronger, safer financial system that protects and promotes Americans’ jobs, savings, retirements and more. To learn more, visit www.bettermarkets.org.