All major U.S. banks have successfully passed a pretty hard stress test, which gave them the Federal reserve. Financial giants will be able to function properly even in conditions of severe and protracted recession in the U.S. and the world in General.
These 33 banks account for about 80% of U.S. banking assets. According to studies the worst-case scenario financial institutions will suffer losses of $385 billion over nine quarters.
The scenario assumes a deep recession worldwide, and the growth of unemployment in the United States by 5% and an acute financial crisis.
The fed statement
“The largest Bank holding company in the country continue to increase capital levels and improve the quality of their loans, reinforcing the ability to lend to individuals and businesses during a deep recession”.
Recall that in this year as the stress test was considered particularly tough hypothetical scenarios. We have already noted that this includes almost double the growth of unemployment, the collapse of markets and negative returns.
The Federal reserve conducts an annual assessment of the stability of the banking sector since 2008 This measure is forcing banks to increase capital. By the way, very soon, on 29 June, will be another round of stress tests, which will assess whether banks to raise dividends. According to Bloomberg, in case of successful completion of this test the six largest U.S. banks will allocate for dividends of about $60 billion.
