Fed says stress test showed large banks ‘well positioned,’ even in recession

The results of the Federal Reserve Board’s annual bank stress test, release on Friday after the close, showed that large banks are “well positioned to weather a severe recession, while staying above minimum capital requirements and continuing to lend to households and businesses,” the central bank announced. All 22 banks tested remained above their minimum CET1 capital requirements during the stress scenario, after absorbing total projected hypothetical losses of more than $550B, the Fed noted. “Large banks remain well capitalized and resilient to a range of severe outcomes,” Vice Chair for Supervision Michelle Bowman said. “One way to address the excessive volatility in the stress test results and corresponding capital requirements is for the Board to finalize the proposal that would average two consecutive years of stress test results, which was released in April.” Publicly traded companies in the space include Bank of America (BAC), Citi (C), Goldman Sachs (GS), JPMorgan (JPM), Morgan Stanley (MS), U.S. Bancorp (USB) and Wells Fargo (WFC).