Banks Pass Fed Stress Test With Mixed Outlook for Higher Payouts

June 30, 2023

Results determine how much capital banks need to set aside as a cushion, potentially clearing the way for dividends and stock buybacks as requirements are met. The latest round showed all of the firms can withstand a severe global recession and turmoil in real estate markets, the Fed said Wednesday. The Fed, which said banks can start disclosing plans Friday, is also weighing an overhaul of its supervision efforts. The Fed projected that the hypothetical calamities would cause banks to lose $541 billion, including $100 billion in losses from commercial real estate and residential mortgages. In the scenario that assumed a 40% slump in commercial real estate prices, banks saw losses on loans tied to the sector hit $64.9 billion.