Fed keeps current stress capital buffer for 2026 round of tests, this year with 32 large banks

32 large banks this year will be evaluated against a severe global recession with heightened stress in both commercial and residential real estate and corporate debt markets under tests announced by the Federal Reserve late Wednesday.

The Fed said, however, that this year’s stress tests of the large banks will maintain the current stress capital buffer requirements until 2027, when new requirements can be calculated based on models that take public feedback into consideration.

“Waiting to calculate new stress capital buffer requirements until we receive public feedback will give us the opportunity to correct any deficiencies in our supervisory models based on that feedback,” Fed Board Vice Chair for Supervision Michelle W. Bowman said in a statement. “This should further improve the transparency, effectiveness, and fairness of our models and improve our accountability to the public.”

The agency said its 2026 stress test scenario sets the U.S. unemployment rate rising to nearly 5.5%, to a peak of 10%. The Fed said the unemployment rate increase is accompanied by severe market volatility, a widening of corporate bond spreads, and a collapse in asset prices. That includes about a 30% decline in house prices and a 39% decline in commercial real estate prices.

Federal Reserve Board finalizes hypothetical scenarios for its annual stress test and votes to maintain the current stress test-related capital requirements until public feedback can be considered