Under the "stress test" exercise, the Fed tests banks' balance sheets against a hypothetical severe economic downturn, the elements of which change annually.
WHY DOES THE FED "STRESS TEST" BANKS?
It typically publishes aggregate industry losses, and individual bank losses including details on how specific portfolios - like credit cards or mortgages - fared.
It announces the size of each bank's stress capital buffer in the subsequent months.
For example, the 2022 stress test envisioned a 5.8 percentage point jump in unemployment under a "severely adverse" scenario.
Persons:
Banks, Wells, Goldman Sachs, Morgan Stanley, Michael Barr, Pete Schroeder, Michelle Price, Andrea Ricci
Organizations:
U.S . Federal, Fed, Citigroup, Bank of America, JPMorgan Chase &, Goldman Sachs, Deutsche Bank's U.S, JPMorgan Citigroup, Wells Fargo & Co, Bank, U.S, Treasury, Thomson
Locations:
Silicon