Bank Stress Test

  

A bank stress test shows how well a bank will do if times get tough. It's a financial EKG of sorts. A whole bunch of fictitious scenarios are created, and your bank is put through the ringer. Banks that hold assets of $50 billion and up must submit to stress tests run by the Federal Reserve on an annual basis. The stress itself would come from a run on the bank where some form of panic makes its holders run to the bank asking to withdraw all their deposited cash. It's this panic that almost killed the banking system in the 20's and set off the Great Depression, when everyone lost trust in pretty much everything. The Fed stimulates the economy by loosening stress tests for banks, and fights inflation by tightening those stresses.

They're kind of the Richard Simmons meets Equinox of financial health.

Related or Semi-related Video

Finance: What is a Merchant Account?4 Views

00:00

Finance allah shmoop What is a merchant account All right

00:07

You sell earrings at the mall hearings for years and

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you know other regions private ones You're a merchant You

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take credit cards visa amex mastercard A customer pays for

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her ear ring with a visa card charge for three

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hundred bucks Alright Well where does that money go How

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does it get there Well because you pierce on earth

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have a merchant account you take her little mag strip

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thing Me on her card with all our information has

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everything on it like her name bank number address phone

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a whole bunch of other codes on it You swipe

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it in your little reader and voila Three hundred boxes

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taken from her account with visa taking about five bucks

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of this transaction for the pleasure or pain of doing

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it And then visa room it's two hundred ninety five

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dollars into your bank of america merchant account that's How

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you got paid So who gets a merchant account Do

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you need a fundamental genetic resistance teo Kryptonite to be

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granted such lofty status No not at all Generally speaking

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all you need is a few grand in a basic

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bank account Reasonable credit scores like above six hundred ish

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And you have to be willing to fork over some

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minimum initial amount as well as minimum monthly amount So

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it's still worth it for the credit card companies and

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banks to continue to be in business with you like

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there's A basic monthly fee for most of them Well

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how do you lose your merchant account status Well you

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offer lousy product to your customers who demand their money

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back through charge cards in what's called a charged back

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like they dispute the charge and make the credit card

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company go after you for the refund And that then

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violates some minimum few percent floor from a credit card

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taking perspective and well then visa mastercard amex will They

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could just stop issuing you a credit taken stopped taking

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customers cards from you and then you have to only

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take cash You're screwed But as long as you follow

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the rules pay your bills and continue to attract creative

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people who want piercings in you know interesting places like

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the mall Then you'll remain in business for a long

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as you want more or less and well so that's

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It You're one of the few the proud the merchants

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