Wall Street is back

The chase by Marty Cej:

The U.S. Federal Reserve yesterday released the results of stress tests applied to 19 major U.S. banks, trials designed to test the banks' abilities to maintain adequate credit levels in the face of a recession more severe than the one most recently experienced. The results were scheduled to be released to the public Thursday but some of the banks, who received their report cards early, couldn't help themselves and starting jumping up and down in the playground like sixth-grade eggheads, screaming "I got an A in this, an A in that, and another A in that… whadjoo get? Whadjoo get?"

Some 15 of the 19 banks tested passed, resulting in huge dividend hikes from JPMorgan Chase, Wells Fargo, BB&T and others. The four banks who slouched off to tell their parents they were being held back this year were Citigroup, Metlife, Suntrust and Ally Financial. Citigroup has already vowed to try again, but we've heard it all before. It's just the same old story, isn't it? Is it our fault? Did we do something wrong? Well, Citigroup can just forget about going to see The Hunger Games on opening night. We'll talk about the surprises, the tests and whether it's time for Canadian investors to take another hard look at the U.S. financials.


One of the financials that will be getting a bit more attention today is Goldman Sachs after a scathing attack in The New York Times by a senior manager who says he will resign today. Greg Smith, an executive director and head of Goldman's U.S. equity derivatives business in Europe, the Middle East and Africa, says that firm's environment after his 10 years there is "as toxic and destructive as I have ever seen it."

Smith says that the culture of the company he joined years ago, a culture that "revolved around teamwork, integrity, a spirit of humility, and always doing right by our clients," had eroded and devolved into an environment where if "you make enough money for the firm (and are not currently an ax murderer) you will be promoted into a position of influence." Is this a PR disaster for Goldman? Just another swipe at a successful firm from a disgruntled employee? There is plenty to work with here. Business Day AM is chasing Smith.


In the meantime, European stocks are higher and stock index futures are pointing to early gains on the back of the Fed's renewed confidence in the U.S. banking sector and also reports that China is easing restrictions on lending at three of the country's biggest banks in a bid to reverse a decline in loan demand.