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Fed to Test Ability of Largest Banks to Weather a Recession

Fed to Test Ability of Largest Banks to Weather a Recession

WASHINGTON—The Federal Reserve said it will test the ability of the largest U.S. banks to weather a hypothetical recession in which markets seize up a

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WASHINGTON—The Federal Reserve said it will test the ability of the largest U.S. banks to weather a hypothetical recession in which markets seize up and unemployment jumps above 10%.

The so-called stress test, conducted annually to see how banks would react to dramatic market and economic shocks, will feature a scenario in which a severe global recession leads to “substantial stress” in commercial real estate and corporate debt markets, the Fed said.

This post first appeared on wsj.com

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