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Citi Fails Stress Test

Shares of Citigroup Inc (NYSE:C) are falling after it was revealed that the mega bank failed the Federal Reserve’s stress test. The Fed also rejected the bank’s proposed increase in dividends and buybacks. Among the big banks, Citi was the only one that received a rejection on its capital plan. This is the second time in three years that Citi has received a failing grade. However, Citi’s capital level (capital cushion) was 1.5 percent higher than the required regulatory minimum. I still don’t understand why Citi would fail if there capital cushion is handily over the regulatory minimum.