Reported 12 months ago
The U.S. Federal Reserve announced that large American banks have passed this year's stress tests, showing their ability to continue lending to the public and businesses even in severe economic downturn scenarios, albeit with larger losses compared to last year. The tested banks, including JPMorgan Chase, Goldman Sachs, American Express, and regional bank Truist, are expected to announce updated dividend and share repurchase plans. Despite facing higher estimated losses in credit card businesses, increased risks in corporate lending, and lower expected income, all banks maintained capital levels above the minimum requirements. This annual stress test is aimed at predicting the health of the banking system, with underperforming banks facing restrictions on shareholder dividends and bonuses. The successful results this year allow banks to avoid such restrictions and opposition to proposed increases in capital requirements by regulatory authorities, following a series of regional bank closures last year. The Federal Reserve found that banks could withstand a repeat of the 2023 deposit crisis or a potential storm from hedge funds, with the possibility of large banks collectively losing up to $85 billion if five major hedge funds collapse.
Source: YAHOO