Fed Miscalculated ‘Stress Tests’

Sometimes even Ben Bernanke makes math errors. The Federal Reserve has admitted to miscalculating bank-loss estimates in its optimistic stress-test results released last week. But the revised calculations—which apply to Citigroup, Bank of America, and several others—don’t affect capital ratios that reveal how the banks would fare in a severely depressed economy. Citigroup’s revised figures for estimated losses on first-lien mortgages decreased from $9.3 billion to $8.9 billion.