Financial Services Forum Statement on Stress Test Results

27 Jun 2019

CONTACT: Julia Lawless
(202) 457-8766

WASHINGTON, D.C. Financial Services Forum President and CEO Kevin Fromer issued the following statement today in response to the Federal Reserve Board’s 2019 Comprehensive Capital Analysis and Review (CCAR) results:

Today’s results underscore the strength and resiliency of the nation’s largest financial institutions. After facing a hypothetical scenario that was far worse than the financial crisis itself – including a larger increase in unemployment and a deeper recession than the 2018 test – Forum members have proven yet again that they can absorb losses and continue to support American businesses, households, and individuals during a time of severe financial stress.

This year marks a decade since the first stress test.  With 10 years of experience, it is now time to review the stress testing process and, as Fed Vice Chairman for Supervision Randal Quarles has stated, enhance the program to increase transparency and improve efficiency. We will continue to work with policymakers to ensure the nation’s capital framework, including stress testing, balances safety without unnecessarily impeding the largest banks as they work to promote economic growth

                                    –  Kevin Fromer, Forum President and CEO

Background:
Earlier this year, the Federal Reserve released its CCAR scenarios to evaluate the resilience of individual financial institutions and measure how a firm would fare in a severe economic downturn. A financial institution must demonstrate it has adequate capital to absorb losses.

To date, Forum members have repeatedly demonstrated the ability to maintain strong capital levels and capital planning processes through severe economic and financial market stress.

Together, Forum member institutions have increased their capital by more than 40 percent from nine years ago to over $900 billion; doubled their liquid assets since 2010; and simplified their corporate structures.

The Federal Reserve has recognized this progress, noting in its inaugural Financial Stability Report, which provides an overview of the health of the U.S. financial system, that the “Reforms undertaken since the financial crisis have made the U .S . financial system far more resilient than it was before the crisis…The nation’s largest banks are strongly capitalized.”

To learn more about how large U.S. financial institutions are safe and sound and supporting the economy click here.

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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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Learn More:

Research Note: Forum Member Resiliency and the Stress Tests Forum members are well-positioned to continue to lend and to meet their financial obligations, even after sustaining losses associated with the severely adverse scenario imposed by the stress tests. Read our research note >