According to the Federal Reserve website, the Dodd-Frank stress tests "are a set of forward-looking exercises conducted both by the Federal Reserve and by financial companies regulated by the Federal Reserve...intended to ensure institutions have sufficient capital to absorb losses and support operations during adverse economic conditions so that they do not pose risks to their communities, other institutions, or the broad economy."
Sounds good. So, what happens when one of the big banks hit hardest by the 2008 financial crisis passes with flying colors?
Matt Koppenheffer owns shares of Bank of America. The Motley Fool owns shares of Bank of America and Citigroup. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.