Stress tests are an important post-crisis tool for promoting the safety and soundness of the U.S. financial system.
Forum members have increased their Tier 1 capital to more than $900 billion, up 40 percent since 2010. Capital is an indicator of resiliency as it stands ready to absorb losses so that banks can continue operating in the face of financial shocks.
Stress tests are conducted annually by the Federal Reserve to assess whether large banks have sufficient capital to continue operations and continue to lend and otherwise support the economy throughout times of economic and financial stress.
Forum members have now completed eight years of CCAR and are continually demonstrating the ability to maintain strong capital levels and capital planning processes through severe economic and financial market stress.
The U.S. banking system has never been stronger and is now able to withstand the shock of even the highly unlikely severely adverse scenario imposed by CCAR. In fact, while losses sustained from stress tests are significant, they pale in comparison to the amount Tier 1 capital that Forum financial institutions hold.
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 CCAR exercise.