The 10-Point: Fed Stress Test Results, Clinton Emails, Russian Spy Games and More

Stress Levels

The results of the Federal Reserve’s much-anticipated 2015 “stress tests” were released yesterday. Billions of dollars in investor payouts were on the line as the Fed gave its verdict on banks’ proposals for dividends and share buybacks. We report that four of the biggest names on Wall Street—Goldman Sachs, J.P. Morgan Chase, Morgan Stanley and Bank of America—struggled to pass and the U.S. units of two foreign banks failed. In a blow to BofA Chief Executive Brian Moynihan’s efforts to improve relations with regulators, the Fed is requiring the bank to submit a reworked plan in the fall, giving only conditional approval for now. The other three banks got the green light only after making adjustments to ensure their capital levels stayed above the Fed’s minimum requirements. Our Heard on the Street writer John Carney takes a closer look at Citigroup, which redeemed itself after its capital plan was rejected on qualitative grounds last year. Here’s a detailed overview of the test results. (Pictured above: People walk past a branch of Bank of America in New York.)

You’ve Got Mail

This isn’t the first time Hillary Clinton’s email use has been a matter of concern. We report that her plan to run her work and private email through the server her husband set up in their family home left his aides worried that adding her account would make the system a target for hackers. Mrs. Clinton’s office has said the system used “robust protections” and “additional upgrades and techniques employed over time as they became available.” We also look at how the email issue—and its flashbacks to past Clinton-family controversies—is fueling some Democrats’ appetite for another candidate. “I’m already tired of talking about Hillary Clinton, and she hasn’t even announced yet,” said Boyd Brown, a South Carolina member of the Democratic National Committee who has been a Clinton critic. Meanwhile, the chairmen of two Republican-led House committees plan to broaden their investigations of Mrs. Clinton’s use of a private email account as secretary of state. Here’s a brief guide to some of the most pressing issues surrounding the email controversy.

Russian Spy Games

As Russian and Western powers move toward a new Cold War over the Ukraine crisis, U.S. officials have grown concerned about Moscow’s spy games. Our story takes an inside look at the Security Service of Ukraine, roughly equivalent to the U.S. Federal Bureau of Investigation, and chronicles its multiyear battle with corruption. According to interviews with Ukrainian officials, we find that the agency was riddled with Russian spies, sympathizers and turncoats by the time the war began last year, and many of its files had been stolen and taken to Russia. We also note that the U.S. is careful about sharing intelligence with Ukraine, in part out of concern that it could fall into Russian hands, according to officials. We previously reported, for example, that U.S. spy-satellite images are degraded before they are shared. For more background information, here arefive things to know about the war in Ukraine.

Shaken, Not Stirred

Forget instant lemonade, powdered alcohol mixed with water may become the drink of choice this summer. We report that the Alcohol and Tobacco Tax and Trade Bureau has approved labels for a booze powder called Palcohol. Lipsmark, the company that makes the product, says Palcohol will come in several varieties—a vodka and a rum, and in three cocktails—Cosmopolitan, Lemon Drop and Powderita, which is designed to taste like a margarita. The product’s debut wasn’t without controversy. Sen. Chuck Schumer (D., N.Y.) last year sent a letter to the FDA encouraging it to ban the substance before it became “the Kool-Aid of teen binge drinking.” We note that Palcohol would need to get approval from state alcohol boards to be sold in 17 beverage control states such as Oregon and Virginia. Pennsylvania already issued a ruling saying it couldn’t be sold by its control board.

Ferguson Shooting

Breaking on WSJ.com: Two police officers were shot early this morning outside the Ferguson, Mo., police department, according to a police spokesman, with their injuries described as serious. The news comes after Ferguson Police Chief Thomas Jackson announced his resignation yesterday and the Justice Department released a report last week documenting the police department’s bias against minorities.

TOP STORIES

U.S.

Eleven Believed Dead After Army Helicopter Crashes Off Florida

Ferguson Police Chief Thomas Jackson Resigns

WORLD

Saudi Nuclear Deal Raises Stakes for Iran Talks

Islamic State Begins Retreat From Tikrit

BUSINESS

Cross-Border Aviation Deals Take Off

GE Weighs Deeper Cuts in Banking Arm

MARKETS

Investors Forced to Get Creative for ‘Carry’ Trade

Nasdaq to Launch Energy Futures Market

NUMBER OF THE DAY

90%

The increase from 2008 to 2012 in assets at China’s state-owned enterprises, defined as those majority-controlled by the government—an indication of how the state sector has grown more dominant in China’s economic life—according to an analysis for The Wall Street Journal.

QUOTE OF THE DAY

‘They don’t have the right to modify an agreement reached, executive to executive, between countries—between leaders of a country.’

—U.S. Secretary of State John Kerry, in a contentious Senate hearing, told lawmakers Wednesday the U.S. isn’t negotiating a “legally binding” agreement with Iran and thus GOP senators were incorrect in their claim they could alter the terms of the deal.

TODAY’S QUESTION

What are your thoughts on the approval of powdered alcohol? Send your comments, which we may edit before publication, to [email protected]. Please include your name and location.

—Compiled by Khadeeja Safdar

READER RESPONSE

Responding to yesterday’s question about Hillary Clinton’s personal email use as secretary of state, Mary Ann Mikulski of New York commented: “I want to think it was just her naiveté about computers, and not a deliberate attempt to hide anything. I think she’s done everything she could to resolve the controversy. However, were I advising her, I would tell her to reconsider, very carefully, her decision to run for the presidency. This brouhaha is just a small sample of the attacks she will be receiving if elected. If you think President Obama is hated by the right, you ain’t seen nothin’ yet.” Robert Snyder of Georgia wrote: “Originally, when she realized there was an issue, she could have turned over the server in its entirety and the issue would have been more about what was on the server than the current concern about what was, and now is not, on the server. At this stage, I don’t believe that there is anything that she can do that will remove the stench of corruption and cover-up. I just hope that the issue is not forgotten over time—she needs to be held accountable.”

This daily briefing is named “The 10-Point” after the nickname conferred by the editors of The Wall Street Journal on the lead column of the legendary “What’s News” digest of top stories. Technically, “10-point” referred to the size of the typeface. The type is smaller now but the name lives on.

Photo: Associated Press