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Investing.com -- The Federal Reserve Board announced Friday that it will release results from its annual bank stress test on Friday, June 27, at 4:30 p.m. EDT.
The Fed also published its annual stress test methodology document today, which provides details about the models used in the test.
The stress test serves as a tool to assess whether banks maintain adequate capital to absorb losses while continuing to lend to households and businesses during a severe recession. It evaluates banks’ resilience by estimating losses, net revenue, and capital levels under a hypothetical recession scenario.
This year, 22 large banks are subject to the Fed’s stress test. The scenario includes a severe global recession with heightened stress in commercial and residential real estate markets, as well as in corporate debt markets.
The stress test results will show whether these financial institutions have sufficient capital buffers to withstand economic downturns while maintaining their lending capabilities.
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