Fed Stress Tests Show All Major U.S. Banks, Including JPMorgan, Can Withstand Severe Recession

Jun 27, 2024, 04:52 AM

The Federal Reserve announced that all major U.S. banks passed the annual stress test, demonstrating their ability to withstand a severe recession while continuing to lend to consumers and corporations. The stress test results showed that despite higher losses reported compared to the previous year, all 31 banks maintained more than the minimum required capital levels. Notably, JPMorgan Chase expressed concerns that the Fed's projections were overly optimistic, indicating that their own estimates suggested higher potential losses. The stress tests highlighted credit cards as a significant factor in the capital decline. Despite these concerns, the results allow banks to announce capital return plans, including dividends and buybacks, starting Friday afternoon after the U.S. market closes. Goldman, BMO, and HSBC were noted for having the lowest capital ratios under the stress test.