MNI: US Banks Pass 2022 Fed Stress Tests

The largest U.S. banks can maintain strong capital levels and keep lending to households and businesses under a severe global recession with substantial stress in commercial real estate and corporate debt markets, the Federal Reserve said Thursday.

Under a stress scenario tougher than that of last year's, the 34 banks would collectively lose USD612 billion, the Fed said in a release.

The aggregate common equity capital ratio, which provides a cushion against losses, is projected to decline by 2.7 pps to a minimum of 9.7%, which is still more than double the minimum requirement, the Fed said.

Larger banks saw an increase of over USD50 billion in losses compared to the 2021 test and the aggregate 2.7 pp decline in capital is slightly larger than the 2.4 pp decline from last year's test but is comparable to recent years, the Fed said.