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The Federal Reserve announced that on Thursday afternoon it will release the results of the latest round of stress tests performed on 19 major U.S. banks. The 19 institutions had submitted in early January comprehensive capital plans describing their strategies over a nine-month period in the event of a crisis.

The supervisory stress scenario examined whether the banks could withstand a crisis in which unemployment hits 13%, stocks fall 50%, and housing prices drop 21%.

The Fed has released a paper on the stress-tests’ methodology, and templates showing the categories that will be disclosed in the results.

Read the Federal Reserve’s press release.
Read the methodology paper.
View the template of Supervisory Stress Scenario Results.

“The banking industry is pleased that the overwhelming majority of institutions passed the Federal Reserve’s stress tests with flying colors. The banking industry has worked hard to fortify its financial base since the financial crisis. The industry is now very well prepared for any challenging economic circumstances that could arise.

At the same time, we object to testing bank capital under theoretical conditions that are far more severe than even those seen during ‘the Great Recession.’ It unjustifiably prohibits some institutions from paying dividends to shareholders and could potentially impair their ability to raise capital and make loans. That is an unnecessary and ill-timed consequence of these stress tests given the essential role of banks in our still-recovering economy.”

By Frank Keating, ABA President and CEO

Read the Federal Reserves release.