America’s largest banks have passed the Federal Reserve’s annual stress test with flying colors.
Since the global financial crisis almost 20 years ago, the Fed has conducted annual stress tests to determine whether the largest banks could withstand an economic shock.
Major banks could endure a “severe recession” and keep lending to businesses and households, the Fed said in its latest stress test results released on June 24.
Under this year’s hypothetical scenario involving 32 banks—with $708 billion in total loan losses—capital positions declined by just 1.6 percentage points in aggregate, remaining firmly above the 4.5 percent minimum capital requirement.
“Today’s results underscore the strength of the banking system,” Michelle Bowman, the Fed vice chair for supervision, said in a statement….