After the three largest bank failures in US history, the Federal Reserve has stated that the banking giants in the US have enough capital to withstand a “highly stressful situation”.
According to the Federal Reserve, the 31 largest banks in the US survived the annual stress test, which simulated approximately $685 billion in credit card, commercial loan, and commercial real estate losses.
This two-year simulation tested a scenario where the stock market plummeted by 55%, commercial real estate prices dropped by 40%, and the unemployment rate reached 10%.
Although all banks on the list have enough capital to weather the financial crisis, the Federal Reserve noted that the banks face greater risks on their balance sheets this year due to increased credit card balances, tighter loan profit margins, and higher corporate loan portfolio risks.
“While this year’s stress test severity is similar to last year’s, the banks face greater risks on their balance sheets, higher expenses, and larger losses resulting from the test.
Our goal with these tests is to help ensure that banks have enough capital to absorb losses under severe stress. This test shows that they indeed have achieved that,” the Federal Reserve stated.
The banks included in the test were JPMorgan Chase, Bank of America, Wells Fargo, Citigroup, Goldman Sachs, and Morgan Stanley.
New York Community Bancorp, a troubled regional bank and the 33rd largest bank in the US, did not participate in the test.
Don’t miss a beat – subscribe to get email alerts directly to your inbox.
Check out the price action.
Follow us on X, Facebook, and Telegram.
Surf The Daily Hodl Mix.
Generated image: halfway
