As reported by Reuters in March 2013, “The newest stress
tests for U.S. banks produced scores that are at odds with other measures of
lenders' safety, in another sign that some institutions may be too big for
regulators to understand and executives to manage. For example, Citigroup Inc,
which has been bailed out multiple times by the U.S. government, showed up on
the score sheets posted by the Federal Reserve . . . as being clearly safer
than JPMorgan Chase & Co. That conclusion is at odds with the views of
investors, bond analysts and credit-rating agencies, as well as when measured
by a yardstick regulators themselves want to use in the future.” Kathleen Shanley, a bond analyst at GimmeCredit, a
research service for institutional investors, said "I wouldn't say that
Citi is safer than JPMorgan, for a variety of reasons, including its track
record.” Citigroup has lower credit ratings than JPMorgan, and prices for
credit default swaps suggest that the market views JPMorgan as safer.
The full essay is at "Fed Whitewashes Citibank."
