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Federal Reserve says U.S. banks can withstand $708 billion in losses amid overhaul of capital rules
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- The industry's common equity tier 1 capital ratio, a key capital measure that would absorb losses in a downturn, fell by 1.6 percentage points during the exercise, remaining comfortably above required minimums.
- "Today's results underscore the strength of the banking system," Federal Reserve Vice Chair for Supervision Michelle Bowman said in a release.
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The biggest U.S. banks would be able to absorb more than $708 billion in losses in a severe global recession while continuing to lend to households and businesses, according to the Federal Reserve's annual stress test released Wednesday.
All 32 banks examined by the Fed remained above their minimum capital requirements under the regulator's hypothetical scenario, which included unemployment surging to 10%, a 39% drop in commercial real estate prices and a 30% decline in home prices.
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