WASHINGTON, DC—Depending on how you look at the results, the Federal Reserve's release in mid-March of its annual stress test on the leading 19 US banks either shows that safeguards put in place since the economic downturn are working, or that the government is far too stringent in its methodology. The latter claim comes from the four banks—New York City-based Citi and MetLife, Atlanta-based SunTrust and Detroit-based Ally Financial—that were deemed by the Fed to have failed the Comprehensive Capital Analysis and Review test.

Granted, the Fed said in a statement that the stress test scenario estimates "are the outcome of deliberately stringent and conservative estimates under hypothetical, adverse conditions." The scenario, enacted to see if the banks could handle another crash in the market, included a peak unemployment rate of 13%, a 50% drop in equity prices and a 21% decline in housing prices. "Strong capital levels are critical to ensuring that banking organizations have the ability to lend and to continue to meet their financial obligations, even in times of economic difficulty," the Fed said.

Many of the banks that passed the test, including JPMorgan Chase, U.S. Bancorp, BB&T and Wells Fargo, touted the results, and announced plans to pay higher dividends and increased schedules on stock buyback from federal debt. Jamie Dimon, chairman and CEO at JPMorgan, said the company is pleased with the results. "JPMorgan Chase continues to invest in substantial organic growth opportunities as our top priority and best use of capital," Dimon said in a statement. "We expect to repurchase, at a minimum, approximately the same amount of shares that we issue for employee stock-based incentive awards. Beyond this, we intend to repurchase equity only when we are generating capital in excess of what we need to fund our organic growth and when we think it provides excellent value to our existing shareholders."