Harvard's Scott Says Fed Stress Tests Restricting Growth

The video discusses the financial index's performance, highlighting its gains and the role of stress tests and rising rates. It critiques the stress test assumptions, noting their impact on capital requirements and economic growth. The discussion shifts to regulatory challenges, public trust in banks, and contrasting views between the Treasury and the Fed on capital levels.

What are the two main reasons given for the financials index's substantial gains?

• Decreasing unemployment and GDP growth

• Government bailouts and tax cuts

• Increased consumer spending and lower interest rates

• Successful passage of stress tests and rising rates

Why do high levels of capital required by stress tests restrict economic growth?

• They lead to higher interest rates for consumers

• They cause banks to hire fewer employees

• They limit the amount of lending banks can do

• They increase inflation rates

What extreme scenario did the stress tests assume for GDP in 2017?

• A 10% decrease

• A 10% increase

• A 5% increase

• A 2% decrease

What is the Treasury's stance on the current stress test scenarios?

• They should be made more stringent

• They should remain unchanged

• They need to be re-examined and possibly relaxed

• They should be conducted more frequently

How often does the Treasury suggest stress tests should be conducted?

• Every year

• Every two years

• Every six months

• Every five years