The Federal Reserve on Wednesday released the results of its annual stress tests of U.S. banks, and all 31 banks tested passed.
The Fed said these large banks appear "well positioned" to weather a severe economic downturn. The results of this year's tests show that the 31 largest U.S. banks will be able to keep their capital levels unchanged and continue lending to support the economy in a recession.
"This year's stress tests showed that large banks have sufficient capital to withstand a highly stressed scenario," Michael Barr, the Fed's vice chairman for supervision, said in a statement.
After absorbing nearly $685 billion in assumed losses, the 31 banks in this year's test remained above their minimum requirement for common equity Tier 1 capital, their regulatory buffer against losses, the Fed said.
The assumptions for the damage include a 40 per cent fall in commercial property prices, a "substantial" rise in office vacancy rates, an unemployment rate averaging 6.5 per cent that peaked at 10 per cent at one point (it is now at 4.0 per cent), and a 36 per cent collapse in home prices. The Federal Reserve on Wednesday released the results of its annual stress tests of U.S. banks, and all 31 banks tested passed.
The Fed said these large banks appear "well positioned" to weather a severe economic downturn. The results of this year's tests show that the 31 largest U.S. banks will be able to keep their capital levels unchanged and continue lending to support the economy in a recession.
"This year's stress tests showed that large banks have sufficient capital to withstand a highly stressed scenario," Michael Barr, the Fed's vice chairman for supervision, said in a statement.
After absorbing nearly $685 billion in assumed losses, the 31 banks in this year's test remained above their minimum requirement for common equity Tier 1 capital, their regulatory buffer against losses, the Fed said.
The assumptions for the damage include a 40 per cent fall in commercial property prices, a "substantial" rise in office vacancy rates, an unemployment rate averaging 6.5 per cent that peaked at 10 per cent at one point (it is now at 4.0 per cent), and a 36 per cent collapse in home prices.
