Federal Reserve Board Releases Hypothetical Scenarios For Its 2021 Bank Stress Tests Date
12/02/2021
The Federal Reserve Board on Friday released the hypothetical scenarios for its 2021 bank stress tests. Last year, the Board found that large banks were generally well capitalized under a range of hypothetical events but due to continuing economic uncertainty placed restrictions on bank payouts to preserve the strength of the banking sector.
The Board s stress tests help ensure that large banks are able to lend to households and businesses even in a severe recession. The exercise evaluates the resilience of large banks by estimating their loan losses and capital levels which provide a cushion against losses under hypothetical recession scenarios that extend nine quarters into the future.