Fed says U.S. banks can withstand $708 billion in losses in stress test
Federal Reserve stress test shows major U.S. banks stayed above capital minimums See projected losses, recession assumptions and why regulators still see resilience
The Federal Reserve said major U.S. banks remained above minimum capital requirements in its annual stress test, even under a severe recession scenario that produced more than $708 billion in projected losses.
The test examined 32 banks and assumed a sharp economic downturn, including 10% unemployment, a 39% fall in commercial real estate prices and a 30% drop in home prices. The industry’s common equity tier 1 ratio fell by 1.6 percentage points during the scenario, but stayed above required levels.
The results come as regulators are revising bank capital rules, and the Fed has said the stresstest buffers will remain unchanged until 2027. Analysts said banks are likely to focus more on the wider capital overhaul than on this year’s test results.