Foreign banks and Fed at odds on stress test impacts

The US units of HSBC and TD Bank drastically undershot the Federal Reserve’s estimates of how much of their loan books would go up in smoke in a financial crisis, stress test disclosures show.

Under the severely adverse scenario of this year’s Dodd-Frank Act stress test (DFAST), the six large non-US bank participants forecast a loan-loss rate of 3.8% on average through the nine quarters of the simulation, against the Fed’s projected 4.8%.

HSBC North America predicted losses of 2.7%, against

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