After the last recession and the collapse of the housing market in the U.S., the Dodd-Frank financial reforms were put into place. Part of the legislation requires that, once a year, the big banks are put through a "stress test." But what kind of test is this, and is it really all that relevant? In this video, Motley Fool Analyst Morgan Housel breaks down how these stress tests work, and how they're designed to insure that banks meet the challenges of the last recession. In no way, however, do they insure that banks will be ready for the next recession, which may look entirely different.
Are banks prepared for the next recession?
About the Author
Morgan Housel is the best-selling author of The Psychology of Money and Same as Ever. A former economics and finance columnist for Fool.com and analyst for Motley Fool One, he currently serves as a partner at The Collaborative Fund and on the board of directors at Markel.
