Financial Services Forum Statement on 2021 Stress Test Scenarios

12 Feb 2021

CONTACT: Barbara Hagenbaugh

(202) 457-8783

bhagenbaugh@fsforum.com

Forum President & CEO says, “The nation’s largest banks can be a vital source of support while at the same time maintaining their position of strength”

Washington, D.C. – Financial Services Forum President and CEO Kevin Fromer issued the following statement today after the Federal Reserve released the scenarios large financial institutions will use for the 2021 Comprehensive Capital Analysis and Review (CCAR) and Dodd-Frank Act stress test exercises:

“Since the onset of the pandemic, which has served as a real-life stress test, the nation’s largest banks have been a vital source of support for businesses, consumers and communities while at the same time maintaining their position of strength in the face of significant economic headwinds. Forum banks are positioned and committed to continuing to support a durable and inclusive recovery months and years ahead.

“The Federal Reserve’s stress testing is a central component of the post-crisis bank regulatory and supervisory framework, intended to measure the resiliency of large banks during a hypothetical severe downturn.  Given the decline in the economy in 2020, the Federal Reserve conducted two rounds of stress tests, both showing that the Forum members were able to support the economy while at the same time remaining strong. Along with heightened capital and liquidity requirements for the largest banks, the framework in the United States has strengthened in recent years.

“We will carefully review the scenarios issued by the Federal Reserve to gain a clear understanding of the stress test standards that must be met.”

Additional Background:

The members of the Financial Services Forum in 2020 increased capital and strengthened their liquidity positions while at the same time supporting business and consumers. They accepted a surge in deposits and dispersed $69 billion in loans to nearly 850,000 small businesses through the Paycheck Protection Program. Further, they helped to raise trillions of dollars in corporate bonds and equity for U.S. companies, allowing them to continue to pay their workers, operate their businesses and meet their funding needs.

Together, Forum member institutions in the past decade have increased their Tier 1 capital by approximately 40 percent, doubled their high-quality liquid assets, simplified their corporate structures, and greatly improved risk management.

The Federal Reserve pointed to this resiliency in its most recent Supervision and Regulation report issued in November. “Banking organizations have been a source of strength, rather than strain, to the economy, entering the COVID event with substantial capital and liquidity and improved risk management and operational resiliency,” the Federal Reserve said.  

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The Financial Services Forum is an economic policy and advocacy organization whose members are the chief executive officers of the eight largest and most diversified financial institutions headquartered in the United States. Forum member institutions are a leading source of lending and investment in the United States and serve millions of consumers, businesses, investors, and communities throughout the country. The Forum promotes policies that support savings and investment, deep and liquid capital markets, a competitive global marketplace, and a sound financial system.
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