Each year, the Federal Reserve test that determines whether a large bank can withstand an economic slump. If a bank passes this test, then it is considered resilient in the event of negative economic activity. It is like a stress test. This story is covered by both the Wall Street Journal and the Washington Post.
After conducting the test, 29 out of the 30 big banks passed this test. Zions Bancorp was the only bank that did not pass this test. This means two things. One, it would probably be a good idea to invest with someone else other than Zions Bancorp. Second, this means that people can trust the banking system with their assets. The Financial Crisis of 2008 did involve the failure of a large bank, Lehman Brothers Holdings. Thomas Donahue, the chief of the U.S. Chamber of Commerce praised the banking system on CNBC. He does not agree with common grievances against banks. Banks have paid back their debts to the federal government plus the interest. It is true that there have been a few bad apples in the banking system, such as Bernie Madoff, but that does not mean that this industry cannot be trusted. People cannot distrust the entire banking system just because there have been a few people who ruined people’s lives with it.
I believe that people cannot believe everything that they read in the media. The banking system is very trustworthy. Sure, there have been some bad people in the past, such as Jordan Belfort or Mark Hanna. However, it is important to know that banks take legality very seriously, as do FINRA and the SEC. My father used to work in financial law enforcement, and now he works in anti-money laundering with Goldman Sachs. It is his job to prevent his company from doing business with anyone who’s money is not clean. In other words, he helps keep Goldman out of trouble. He also helps prevent insider-trading. His company takes compliance very seriously. He is a reason why we can trust the banking system. He helps ensure that money is being handled ethically and legally.
If the government supports the banking system, what reason do we have not to? The banks have paid back their debts and the interest. Furthermore, the government is testing their resiliency in the event like what happened in 2008. The banking system is a trustworthy industry, and anyone who says otherwise needs to do a little more research.