Get Annual Company-run Stress Test - U.s. Government Printing Office - Federalreserve

The stress test is a forward-looking quantitative evaluation of bank capital that demonstrates how a hypothetical macroeconomic recession scenario would affect firm capital ratios. For the first several years of stress testing, CCAR was a public exercise that included a quantitative and qualitative assessment.

Also, as part of the stress tests, the Fed conducted an “exploratory analysis” of only the eight biggest US banks regarding funding stresses under an adverse scenario that would involve the implosion of five large hedge funds. In such a situation, the big banks would lose between $70 billion and $85 billion.

As part of its supervision efforts, the Federal Reserve conducts annually a supervisory stress test. The stress test assesses how large banks are likely to perform under hypothetical economic conditions.

The results of the 2024 supervisory stress test indicate large banks would experience substantial losses under the severely adverse scenario but would maintain common equity tier 1 (CET1) capital ratios above the required minimum regulatory levels throughout the projection horizon.

The stress testing rule (12 CFR 46.5) requires a covered institution to conduct a stress test every other year, on even-numbered years, unless it is consolidated under a holding company that is required by the Board of Governors of the Federal Reserve (under 12 CFR 252.54(a)(2)) to conduct an annual company-run stress ...

All 31 big US banks have passed the Federal Reserve's annual "stress test" designed to assess how well they would fare in a major financial crisis, the US central bank said Wednesday, while warning that losses would be higher than last year.

The 2024 severely adverse scenario is that of a typical crisis, characterized by steep declines in interest rates and asset values, plummeting equity and real estate markets, and soaring credit spreads and unemployment rates.

As part of its supervision efforts, the Federal Reserve conducts annually a supervisory stress test. The stress test assesses how large banks are likely to perform under hypothetical economic conditions.