Investing.com -- The largest U.S. banks are healthy enough to weather a severe global economic recession, the Federal Reserve said Wednesday after releasing the results from its latest “stress tests.”
This year's test, which tested conditions under a “severely adverse scenario,” involved a hypothetical global recession lasting from Q4 2023 to Q3 2025, forcing economic growth to fall 8.5%, with unemployment jumping to 6.3% to a 10% peak, and stock prices falling 55%. The average tier-one capital ratio, or CET1, the cushion against losses, of these banks was projected to fall by 2.8% to 9.9%, but that would still be more than double the 4.5% minimum level required under the Dodd-Frank Act.
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