WASHINGTON — The nation’s 31 largest banks are adequately fortified to withstand a severe U.S. and global recession and keep lending, the Federal Reserve said Thursday.
Results of the Fed’s annual “stress tests” show that, as a group, the 31 banks are stronger than at any time since the 2008 financial crisis struck, thanks to a steadily recovering economy. The results build on positive outcomes from last year’s tests.
Some analysts say the most critical tests for the industry will come next week. That’s when the Fed will announce whether it has approved each bank’s request, if one has been made, to raise dividends or repurchase shares. Those results will be based on how each bank would fare in a severe recession if it took such steps.
“This week’s tests are a more modest standard than what we will get next week,” said Cayetano Carrasco-Gea, senior director at Moody’s Analytics.
The banks undergoing the stress tests included JPMorgan Chase & Co., Bank of America Corp., Citigroup Inc. and Wells Fargo and Co. — the four biggest U.S. banks by assets.
