Federal Reserve Board Releases Results of Supervisory Bank Stress Tests
The nation's largest and most complex banks have strong capital levels that would allow them to stay well above their minimum requirements after being tested against a severe hypothetical recession, according to the results of supervisory stress tests released Friday by the Federal Reserve Board.
 
The most severe hypothetical scenario projects $410 billion in total losses for the 18 participating bank holding companies. This scenario featured a global recession with the U.S. unemployment rate rising by more than 6 percentage points to 10 percent, accompanied by a large decline in real estate prices and elevated stress in corporate loan markets.
 
The firms' aggregate common equity tier 1 capital ratio, which compares high-quality capital to risk-weighted assets, would fall from an actual level of 12.3 percent in the fourth quarter of 2018 to a minimum level of 9.2 percent. Since 2009, the common equity capital at the 18 firms has increased by more than $680 billion.
 
"The results confirm that our financial system remains resilient," Vice Chairman Randal K. Quarles said. "The nation's largest banks are significantly stronger than before the crisis and would be well-positioned to support the economy even after a severe shock."