WASHINGTON — For the first time since multiple bank runs felled a handful of large regional banks, the Federal Reserve will release the results of annual bank stress tests on June 28.
While the
Fed Vice Chair for Supervision Michael Barr has said that the central bank is considering how to shore up the health of banks, specifically large regional banks, in the aftermath of three of the largest bank failures in U.S. history. Banks of that size — between $100 billion and $250 billion of assets — participate every other year.
This year, 23 banks were assessed in the stress tests.
This year's tests also include an exploratory market shock, applied to the trading books of global systemically important banks. While those results won't be factored into capital requirements, they will be used to evaluate the resiliency of the banks and could impact how future tests are done.
This year's severely adverse scenario includes a 6.5 percentage-point unemployment rate increase to 10%, widening corporate bond spread and collapse of asset prices.
It also includes residential and commercial real estate value declining by 38% and 40%, respectively. The value of commercial real estate
The severity of the stress tests have previously drawn criticism from banks and their advocates. Last year, they
