Federal Reserve Stress Test: 32 U.S. Banks Can Absorb $708B in Losses on Wednesday

According to the Federal Reserve's annual stress test released Wednesday, all 32 U.S. banks examined can absorb more than $708 billion in losses during a severe global recession while continuing to lend. The hypothetical scenario included unemployment at 10%, a 39% decline in commercial real estate prices, and a 30% drop in home prices.

The industry's common equity tier 1 capital ratio fell 1.6 percentage points but remained above regulatory minimums. Projected losses included roughly $200 billion from credit cards, $160 billion from commercial and industrial loans, and $75 billion from commercial real estate. The Federal Reserve said stress test buffers will remain unchanged until 2027 as regulators revise the methodology.