Bank / Credit Union
Banks pass Fed stress test
June 30, 2023
The Federal Reserve ran a stress test on 23 U.S. banks and all passed. The test assesses if banks would have enough capital to absorb losses and continue lending to customers in the face of an economic recession, according to a report by Yahoo! Finance.
The Fed runs the test based on if unemployment hit 10% and the stock market fell to 45%, representing a loss of $541 billion. JPMorgan Chase, Bank of America, Citigroup, Wells Fargo, Goldman Sachs, Morgan Stanley, PNC, Truist and M&T all had capital buffers above the Fed's 4.5% minimum requirement.
"Today's results confirm that the banking system remains strong and resilient," Michael Barr, chair for supervision, Federal Reserve, said in the report. "At the same time, this stress test is only one way to measure that strength. We should remain humble about how risks can arise and continue our work to ensure that banks are resilient to a range of economic scenarios, market shocks, and other stresses."
In the extreme scenario, Citigroup still had $34.9 billion on hand, Wells Fargo had $32.9 billion and JPMorgan had $30.1 billion.
