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The Independent
16 hours ago
- Business
- The Independent
Big banks all pass the Federal Reserve's stress tests, but the tests were less vigorous this year
All the major banks passed the Federal Reserve 's annual 'stress tests" of the financial system, the central bank said Friday, but the test conducted by the central bank was notably less vigorous than it had been in previous years. All 22 banks tested this year would have remained solvent and above the minimum thresholds to continue to operate, the Fed said, despite absorbing roughly $550 billion in theoretical losses. In the Fed's scenario, there would be less of a rise in unemployment, less of a severe economic contraction, less of a drop in commercial real estate prices, less of a drop in housing prices, among other metrics compared to what they tested in 2024. All of these less harmful, but simulated, drops mean there would be less damage to these banks' balance sheets and less risk of these banks of potentially failing. Since the banks passed the 2024 tests, it was expected that the banks would pass the 2025 tests. 'Large banks remain well capitalized and resilient to a range of severe outcomes,' said Michelle Bowman, the bank's vice chair for supervision, in a statement. An appointee of President Trump, Bowman became the Fed's vice chair of supervision earlier this month. It's not clear why the Fed chose to go with a less vigorous test this year. In a statement, the bank said previous tests had shown 'unintended volatility' in the results and it plans to seek public and industry comment to adjust stress tests in future years. The Fed also chose to not test the banks as heavily on their exposure to private equity assets, arguing that private equity assets are typically held for the long term and are not typically sold at times of distress. The Fed also didn't test for any bank exposure to private credit, a $2 trillion asset class that even Fed researchers themselves have observed to be growing alarmingly quickly. The Federal Reserve Bank of Boston recently pointed out that private credit could be a systemic risk to the financial system under a severe adverse scenario, which is exactly what the stress tests are supposed to test for. There was no wording or phrasing in the Fed's press release, reports or methodology about testing or measuring private credit or private debt in this year's test. The Fed's 'stress tests' were created after the 2008 financial crisis as a way to gauge whether the nation's 'too big to fail' banks could withstand another financial crisis like the once that happened nearly 20 years ago. The tests are effectively an academic exercise, where the Fed simulates a scenario in the global economy and measures what that scenario would do to bank balance sheets. The 22 banks that are tested are the biggest names in the business, such as JPMorgan Chase, Citigroup, Bank of America, Morgan Stanley and Goldman Sachs, which hold hundreds of billions of dollars in assets and have wide-ranging businesses that touch every part of the U.S. and global economy. Under this year's hypothetical scenario, a major global recession would have caused a 30% decline in commercial real estate prices and a 33% decline in housing prices. The unemployment rate would rise to 10% and stock prices would fall 50%. In 2024, the hypothetical scenario was a 40% decline in commercial real estate prices, a 55% decline in stock prices and a 36% decline in housing prices. With their passing grades, the major banks will be allowed to issue dividends to shareholders and buy back shares of stock to return proceeds to investors. Those dividend plans will be announced next week.
Al Arabiya
16 hours ago
- Business
- Al Arabiya
Big banks all pass the Federal Reserve's stress tests, but the tests were less vigorous this year
All the major banks passed the Federal Reserve's annual stress tests of the financial system, the central bank said Friday, but the test conducted by the central bank was notably less vigorous than it had been in previous years. All 22 banks tested this year would have remained solvent and above the minimum thresholds to continue to operate, the Fed said, despite absorbing roughly $550 billion in theoretical losses. In the Fed's scenario, there would be less of a rise in unemployment, less of a severe economic contraction, less of a drop in commercial real estate prices, less of a drop in housing prices, among other metrics, compared to what they tested in 2024. All of these less harmful but simulated drops mean there would be less damage to these banks' balance sheets and less risk of these banks potentially failing. Since the banks passed the 2024 tests, it was expected that the banks would pass the 2025 tests. 'Large banks remain well capitalized and resilient to a range of severe outcomes,' said Michelle Bowman, the bank's vice chair for supervision, in a statement. An appointee of President Trump, Bowman became the Fed's vice chair of supervision earlier this month. It's not clear why the Fed chose to go with a less vigorous test this year. In a statement, the bank said previous tests had shown unintended volatility in the results, and it plans to seek public and industry comment to adjust stress tests in future years. The Fed also chose not to test the banks as heavily on their exposure to private equity assets, arguing that private equity assets are typically held for the long term and are not typically sold at times of distress. The Fed also didn't test for any bank exposure to private credit, a $2 trillion asset class that even Fed researchers themselves have observed to be growing alarmingly quickly. The Federal Reserve Bank of Boston recently pointed out that private credit could be a systemic risk to the financial system under a severe adverse scenario, which is exactly what the stress tests are supposed to test for. There was no wording or phrasing in the Fed's press release, reports, or methodology about testing or measuring private credit or private debt in this year's test. The Fed's stress tests were created after the 2008 financial crisis as a way to gauge whether the nation's 'too big to fail' banks could withstand another financial crisis like the one that happened nearly 20 years ago. The tests are effectively an academic exercise where the Fed simulates a scenario in the global economy and measures what that scenario would do to bank balance sheets. The 22 banks that are tested are the biggest names in the business, such as JPMorgan Chase, Citigroup, Bank of America, Morgan Stanley, and Goldman Sachs, which hold hundreds of billions of dollars in assets and have wide-ranging businesses that touch every part of the US and global economy. Under this year's hypothetical scenario, a major global recession would have caused a 30 percent decline in commercial real estate prices and a 33 percent decline in housing prices. The unemployment rate would rise to 10 percent, and stock prices would fall 50 percent. In 2024, the hypothetical scenario was a 40 percent decline in commercial real estate prices, a 55 percent decline in stock prices, and a 36 percent decline in housing prices. With their passing grades, the major banks will be allowed to issue dividends to shareholders and buy back shares of stock to return proceeds to investors. Those dividend plans will be announced next week.
Yahoo
17 hours ago
- Business
- Yahoo
Big banks all pass the Federal Reserve's stress tests, but the tests were less vigorous this year
NEW YORK (AP) — All the major banks passed the Federal Reserve's annual 'stress tests" of the financial system, the central bank said Friday, but the test conducted by the central bank was notably less vigorous than it had been in previous years. All 22 banks tested this year would have remained solvent and above the minimum thresholds to continue to operate, the Fed said, despite absorbing roughly $550 billion in theoretical losses. In the Fed's scenario, there would be less of a rise in unemployment, less of a severe economic contraction, less of a drop in commercial real estate prices, less of a drop in housing prices, among other metrics compared to what they tested in 2024. All of these less harmful, but simulated, drops mean there would be less damage to these banks' balance sheets and less risk of these banks of potentially failing. Since the banks passed the 2024 tests, it was expected that the banks would pass the 2025 tests. 'Large banks remain well capitalized and resilient to a range of severe outcomes,' said Michelle Bowman, the bank's vice chair for supervision, in a statement. An appointee of President Trump, Bowman became the Fed's vice chair of supervision earlier this month. It's not clear why the Fed chose to go with a less vigorous test this year. In a statement, the bank said previous tests had shown 'unintended volatility' in the results and it plans to seek public and industry comment to adjust stress tests in future years. The Fed also chose to not test the banks as heavily on their exposure to private equity assets, arguing that private equity assets are typically held for the long term and are not typically sold at times of distress. The Fed also didn't test for any bank exposure to private credit, a $2 trillion asset class that even Fed researchers themselves have observed to be growing alarmingly quickly. The Federal Reserve Bank of Boston recently pointed out that private credit could be a systemic risk to the financial system under a severe adverse scenario, which is exactly what the stress tests are supposed to test for. There was no wording or phrasing in the Fed's press release, reports or methodology about testing or measuring private credit or private debt in this year's test. The Fed's 'stress tests' were created after the 2008 financial crisis as a way to gauge whether the nation's 'too big to fail' banks could withstand another financial crisis like the once that happened nearly 20 years ago. The tests are effectively an academic exercise, where the Fed simulates a scenario in the global economy and measures what that scenario would do to bank balance sheets. The 22 banks that are tested are the biggest names in the business, such as JPMorgan Chase, Citigroup, Bank of America, Morgan Stanley and Goldman Sachs, which hold hundreds of billions of dollars in assets and have wide-ranging businesses that touch every part of the U.S. and global economy. Under this year's hypothetical scenario, a major global recession would have caused a 30% decline in commercial real estate prices and a 33% decline in housing prices. The unemployment rate would rise to 10% and stock prices would fall 50%. In 2024, the hypothetical scenario was a 40% decline in commercial real estate prices, a 55% decline in stock prices and a 36% decline in housing prices. With their passing grades, the major banks will be allowed to issue dividends to shareholders and buy back shares of stock to return proceeds to investors. Those dividend plans will be announced next week. Ken Sweet, The Associated Press Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Associated Press
17 hours ago
- Business
- Associated Press
Big banks all pass the Federal Reserve's stress tests, but the tests were less vigorous this year
NEW YORK (AP) — All the major banks passed the Federal Reserve's annual 'stress tests' of the financial system, the central bank said Friday, but the test conducted by the central bank was notably less vigorous than it had been in previous years. All 22 banks tested this year would have remained solvent and above the minimum thresholds to continue to operate, the Fed said, despite absorbing roughly $550 billion in theoretical losses. In the Fed's scenario, there would be less of a rise in unemployment, less of a severe economic contraction, less of a drop in commercial real estate prices, less of a drop in housing prices, among other metrics compared to what they tested in 2024. All of these less harmful, but simulated, drops mean there would be less damage to these banks' balance sheets and less risk of these banks of potentially failing. Since the banks passed the 2024 tests, it was expected that the banks would pass the 2025 tests. 'Large banks remain well capitalized and resilient to a range of severe outcomes,' said Michelle Bowman, the bank's vice chair for supervision, in a statement. An appointee of President Trump, Bowman became the Fed's vice chair of supervision earlier this month. It's not clear why the Fed chose to go with a less vigorous test this year. In a statement, the bank said previous tests had shown 'unintended volatility' in the results and it plans to seek public and industry comment to adjust stress tests in future years. The Fed also chose to not test the banks as heavily on their exposure to private equity assets, arguing that private equity assets are typically held for the long term and are not typically sold at times of distress. The Fed also didn't test for any bank exposure to private credit, a $2 trillion asset class that even Fed researchers themselves have observed to be growing alarmingly quickly. The Federal Reserve Bank of Boston recently pointed out that private credit could be a systemic risk to the financial system under a severe adverse scenario, which is exactly what the stress tests are supposed to test for. There was no wording or phrasing in the Fed's press release, reports or methodology about testing or measuring private credit or private debt in this year's test. The Fed's 'stress tests' were created after the 2008 financial crisis as a way to gauge whether the nation's 'too big to fail' banks could withstand another financial crisis like the once that happened nearly 20 years ago. The tests are effectively an academic exercise, where the Fed simulates a scenario in the global economy and measures what that scenario would do to bank balance sheets. The 22 banks that are tested are the biggest names in the business, such as JPMorgan Chase, Citigroup, Bank of America, Morgan Stanley and Goldman Sachs, which hold hundreds of billions of dollars in assets and have wide-ranging businesses that touch every part of the U.S. and global economy. Under this year's hypothetical scenario, a major global recession would have caused a 30% decline in commercial real estate prices and a 33% decline in housing prices. The unemployment rate would rise to 10% and stock prices would fall 50%. In 2024, the hypothetical scenario was a 40% decline in commercial real estate prices, a 55% decline in stock prices and a 36% decline in housing prices. With their passing grades, the major banks will be allowed to issue dividends to shareholders and buy back shares of stock to return proceeds to investors. Those dividend plans will be announced next week.
Daily Mail
17-06-2025
- Politics
- Daily Mail
Amy Coney Barrett faces backlash from MAGA after Trump appointment
A new analysis appears to confirm conservative fears that Donald Trump-appointed Supreme Court Justice Amy Coney Barrett has often swung to the left in her rulings. Many allies of the president have even referred to the justice - who has seven children, including two adopted from Haiti - as a 'DEI hire' and there are reports Trump himself has complained about Barrett's rulings. The associate justice was chosen by Trump and rushed through confirmation by Senate Republicans in 2020 ahead of the November presidential election. But since her appointment to replace liberal hero Ruth Bader Ginsburg, Barrett has joined her liberal colleagues on several occasions for rulings that have hampered Trump and his second term agenda. GOP outcry toward Barrett includes her judging against the blocking of foreign aid and against delaying Trump's sentenced on 34 felony counts of falsifying business records just days before his inauguration. That has led the liberal New York Times to call Barrett: 'One of the few people in the country to check the actions of the president.' A new study of Barrett's first half-decade on the court prepared for the paper finds those worries may not be out of tune with her record from the bench. Several law professors determined that Barrett doesn't come close to conservative icon Antonin Scalia and 'is showing signs of leftward drift' as she plays 'an increasingly central role on the court. They cite her agreeing with liberal justices Sonia Sotomayor and Elena Kagan, specifically, 82 percent of the time during her second term, up from 39 percent in her first. Her central role includes writing her rulings separately from the other justices more frequently. Not only has she aligned 'more frequently with liberal majorities,' she is the Republican 'least likely to support Trump' in cases that involve the president himself. She has voted with liberal majorities 91 percent of the time while voting with conservative majorities just 84 percent of the time, though given the 6-3 conservative bend of the court, there are more conservative than liberal victories. Mike Davis, a Trump ally and conservative legal activist, is greatly disappointed in Barrett. 'We had too much hope for her. She doesn't have enough courage,' said Davis, who was criticized by phone earlier this year by conservative Justice Neil Gorsuch for Davis' comments about Barrett on Steve Bannon's podcast. Davis called Barrett 'scared of her own shadow.' 'She is a rattled law professor with her head up her [expletive],' Davis, a former clerk to Gorsuch, told Bannon. He also blasted her as 'weak and timid' to NBC News. Right-wing influencer Eric Daugherty attacked the justice in a series of tweets as an 'anti-Trump judge' and a 'big problem.' 'Barrett deceived people into thinking she was a reliable constitutionalist. The power has gone to her head. It happens with frightening regularity the last half century,' posted conservative radio host Mark Levin. Megyn Kelly went off on her on her podcast as 'a little squishy.' 'As a female who leans right, I'm kind of sick of like, the female conservatives who get appointed to the Supreme Court, Sandra Day O'Connor, now Amy Coney Barrett, like being too squishy,' she ranted. 'Get somebody with some rhetorical balls who will hold as fiercely to conservative principles in the judiciary as the left wing does,' she added. However, Noah Feldman, a friend of Barrett's and a Harvard law professor, claim the hype of Barrett's left leanings are overstated by both sides. 'It's a mistake by ignorant conservatives and wishful liberals to believe she's moderating,' Feldman said. 'She's exactly the person I met 25 years ago: principled, absolutely conservative, not interested in shifting.' In January, Barrett was among the same five-justice majority that ruled against Trump's request to halt him being sentenced on 34 felony counts of falsifying business records just days before his inauguration. But Barrett has also been a swing vote siding with conservatives as well. She was in the majority which overturned Roe v Wade in 2023. She was also in the 6-3 conservative majority last June that ruled presidents have some immunity from prosecution for actions taken while in office. Trump nominated Barrett to replace late Justice Ruth Bader Ginsburg on the Supreme Court after she passed away in September 2020. In announcing her nomination, Trump said Barrett was going to be 'fantastic.' 'No matter the issue, no matter the case before her, I am supremely confident that Judge Barrett will issue rulings based solely upon a fair reading of the law,' the president said at the time. Despite refusing to confirm an Obama Supreme Court nominee ahead of the 2016 election, Senate Republicans in the majority ramped through Barrett's confirmation. The move solidified a conservative supermajority on the country's highest court just weeks before Joe Biden won the election and Democrats flipped the Senate.
