CONTACT: Julia Lawless
WASHINGTON, D.C. – Financial Services Forum President and CEO Kevin Fromer issued the following statement today after the Federal Reserve Board released the scenarios large financial institutions will use for the 2020 Comprehensive Capital Analysis and Review (CCAR) and Dodd-Frank Act stress test exercises:
A hypothetical economic landscape designed to be far worse than the financial crisis itself will serve as the new base to measure the strength and resiliency of the nation’s largest financial institutions. We will carefully review these scenarios to gain a clearer understanding of the standards that must now be met. U.S. banks’ strong capital and liquidity levels have consistently been recognized by the Fed as a pillar of health and strength within global markets – a sign that Forum member firms are well-positioned to perform in the face of economic distress. The Forum continues to support ongoing efforts by federal regulators to improve the current stress test regime and preserve the safety and soundness of the American financial system.”
Last fall, the Federal Reserve issued its Financial Stability Report, which provides an overview of the health of the U.S. financial system. Specifically, the report noted, “The largest U.S. banks remain strongly capitalized.” “The most recent stress tests conducted by the Federal Reserve indicate that the largest banks are sufficiently resilient to continue to serve creditworthy borrowers even under a severely adverse scenario.”
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, as evidenced by the 2019 Comprehensive Capital Analysis and Review (CCAR) results.
Together, Forum member institutions have increased their Tier 1 capital by more than 40 percent from nine years ago to $926 billion; doubled their liquid assets since 2010; and simplified their corporate structures. As of the third quarter of 2019, Forum members maintained an average Tier 1 common equity risk-based capital ratio of 12.1 percent, compared to 4.9 percent in 2009.