Fed stress test found 32 big US banks could absorb $708 billion
What's next: The results will not change bank capital buffers until 2027 as regulators rework the stress-test model.
The Federal Reserve’s annual stress test found that the 32 largest U.S. banks could withstand more than $708 billion in losses in a severe global recession and still remain above minimum capital requirements. The scenario assumed unemployment rising to 10%, commercial real estate prices falling 39% and home prices dropping 30%. The industry’s common equity tier 1 ratio fell 1.6 percentage points during the exercise. Projected losses included about $200 billion on credit cards, $160 billion on commercial and industrial loans, and $75 billion on commercial real estate. Several banks moved quickly to raise dividends, including JPMorgan Chase, Goldman Sachs, Morgan Stanley, State Street and Wells Fargo.