Fed's Stress Test Shows Banks Could Weather $526 Billion In Losses

The Federal Reserve said Thursday that 33 of the nation's biggest banks could weather an estimated $526 billion in losses from the first round of its stress tests without breaking rules for minimum levels of capital. The Fed said this year's "severely adverse" stress test modeled a severe global recession with the domestic unemployment rate rising five percentage points, accompanied by a heightened period of financial stress, and negative yields for short-term U.S. Treasury securities. The Fed noted that the banks have added a cumulative $700 billion in equity capital since 2009. The Fed still hasn't given the all-clear for banks to announce new rounds of dividends and buybacks, which will come when the Comprehensive Capital Analysis and Review is released on June 29 after the close of trading.

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