⚡ US Federal Reserve Bank Stress Test Results: Are Banks Resilient?
posted 27 Jun 2024
The US Federal Reserve has concluded its annual stress test, evaluating 31 banks to ensure they can withstand minimum capital requirements in the event of a hypothetical recession.
The test measures the robustness of major banks against financial market shocks, utilizing data from the previous year’s end. This year’s scenario included an unemployment rate peaking at 10%.
All 31 banks successfully met the minimum Common Equity Tier 1 (CET1) capital requirements after accounting for nearly $685 billion in total projected hypothetical losses. The results indicate that banks are well-prepared to endure a significant recession.
This year’s stress test shows that large banks have sufficient capital to withstand a highly stressful scenario and meet their minimum capital ratios... While the severity of this year’s stress test is similar to last year’s, the test resulted in higher losses because bank balance sheets are somewhat riskier and expenses are higher,stated Vice Chair for Supervision Michael S. Barr.
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