Fed stress test: all 32 large banks stay above capital minimums in severe-recession scenario
The Federal Reserve said on June 24 that its annual stress test confirms large banks are well positioned to weather a severe recession and continue lending to households and businesses.
At a glance
- All 32 large banks tested remained above minimum CET1 capital requirements in the Fed's 2026 stress test.
- The scenario projected more than $708 billion in total losses and a 1.6 percentage point aggregate capital decline.
- The hypothetical scenario included 10% peak unemployment, a 39% commercial real estate price decline and a 30% house price decline.
VERDICT — CONFIRMED
The Federal Reserve said on June 24 that its annual stress test confirms large banks are well positioned to weather a severe recession and continue lending to households and businesses. Per the release, all 32 banks tested remained above their minimum common equity tier 1 capital requirements despite more than $708 billion in projected losses — including roughly $200 billion on credit cards and $160 billion on commercial and industrial loans — with aggregate capital ratios declining 1.6 percentage points. The hypothetical scenario featured a severe global recession with unemployment peaking at 10%, a 39% fall in commercial real estate prices and a 30% decline in house prices; Vice Chair Michelle Bowman said the results "underscore the strength of the banking system."
Key facts on file
- All 32 large banks tested remained above minimum CET1 capital requirements in the Fed's 2026 stress test.
- The scenario projected more than $708 billion in total losses and a 1.6 percentage point aggregate capital decline.
- The hypothetical scenario included 10% peak unemployment, a 39% commercial real estate price decline and a 30% house price decline.
