All 22 Large US Banks Pass Federal Reserve Stress Tests

All 22 of the largest U.S. banks passed the Federal Reserve's annual stress tests, demonstrating strong capital positions and resilience against a hypothetical severe economic downturn including a 10% unemployment rate and significant declines in real estate prices. The aggregate decline in the banks' common equity tier 1 capital ratio was 1.8 percentage points, a smaller decrease than in recent years, indicating improved financial health and allowing banks to consider increasing dividends and share buybacks. Fed Vice Chair for Supervision Michelle Bowman highlighted that large banks remain well capitalized and resilient, though she also noted the stress test's volatility and the need for methodological reforms. Under President Trump’s administration, there are ongoing efforts to relax and overhaul the stress test framework to reduce volatility and improve transparency, including a proposal to average stress test results over two years for capital requirement calculations. Despite the positive results, banks will initially have capital buffers based on this year's testing alone, with the averaged results expected to affect assessments starting in 2026. Investor anticipation is growing around upcoming announcements regarding dividends and stock-buyback plans following the stress test success.