(Headline article below) This is a lie, and it doesn’t make any logical sense. And typically in fractional reserve banking, you deposit $100 and the bank loans out $90, which in effect leads to adding money into the system, creating money out of thin air (see video below). If confidence is lost, bank runs commence, and banks fold. The only thing the government could do to fix the problem is to print money as the insurance fund isn’t sufficient, and this will devalue your savings you get back heavily. And this might be even worse given the statement below about 4.5% capitalization. And these corrupt bankers don’t even pay you much in interest while they rake in higher gains from your money, leaving it to devalue due to inflation, and bankers even fight against you having other options with higher returns for fear of losing their golden goose. Consequently, there is a financial reckoning coming, and it could be worse than the Great Depression.
Under this year’s hypothetical scenario involving 32 banks—with $708 billion in total loan losses—capital positions declined by just 1.6 percentage points in aggregate, remaining firmly above the 4.5 percent minimum capital requirement.
‘Today’s results underscore the strength of the banking system,’ Michelle Bowman, the Fed vice chair for supervision, said in a statement.
By Andrew Moran
America’s largest banks have passed the Federal Reserve’s annual stress test with flying colors.
Since the global financial crisis almost 20 years ago, the Fed has conducted annual stress tests to determine whether the largest banks could withstand an economic shock.
Major banks could endure a “severe recession” and keep lending to businesses and households, the Fed said in its latest stress test results released on June 24.
Under this year’s hypothetical scenario involving 32 banks—with $708 billion in total loan losses—capital positions declined by just 1.6 percentage points in aggregate, remaining firmly above the 4.5 percent minimum capital requirement.
“Today’s results underscore the strength of the banking system,” Michelle Bowman, the Fed vice chair for supervision, said in a statement.
“As we work to increase the transparency and accountability of the stress test, public feedback will help us continue to improve and instill greater confidence in the stress test and its results.”
This year’s hypothetical scenario featured a severe global recession with a 39 percent decline in commercial real estate prices and a 30 percent drop in home prices. Additionally, the unemployment rate climbed to a peak of 10 percent, and economic output fell sharply.
Officials noted that the results were fueled by three primary drivers, “with two leading to a larger decline in the aggregate capital ratio than last year, and one more than offsetting this decline.”
The first is that higher projected interest income bolstered capital and countered other pressures. The second had higher projected loan losses, which reduced capital. The final factor consisted of lower unrealized gains in securities.
Total projected losses included approximately $200 billion in credit card losses, $160 billion in commercial and industrial loan losses, and $75 billion in commercial real estate losses.
Despite reforms coming to the stress test and capital requirements, current levels will remain in place until 2027, the Fed noted.
Scores of bank stocks edged higher in after-hours trading following the stress test results.
JPMorgan Chase ticked up by 0.5 percent, Bank of America jumped by 0.2 percent, and Goldman Sachs surged by 11 percent.
Stress Test Reforms
Last year, the Fed announced that it would examine reforms to banks’ stress tests.
Some of the potential changes include boosting reporting forms, expanding the disclosure process, and adjusting the annual timeline for comment periods.
The decision was made in response to industry litigation challenging the institution’s stress-testing methodology.
Bowman, appearing before the House Financial Services Committee earlier this month, defended upcoming reforms.
“Tailoring requirements meaningfully impacts banks of all sizes,” Bowman said in prepared remarks.
“For large banks, stress testing remains a regulatory cornerstone. We are reviewing comments on proposed changes to the stress test.
“The proposal increases transparency in how these tests are conducted, enabling stakeholders to identify model weaknesses and helping banks better plan capital needs across business lines.”
But some economic observers are skeptical about the efficacy of these stress tests.
Dmitri Maxim, forensic financial analyst and author of “Marpole: Return of Measure,” says the metrics are subjective and prone to potential manipulation.
“I would probably look at unrealized losses,” Maxim told The Epoch Times.
“If you’re looking at the stress test of the interest rate, the consumers, and everything else, the moment they decide to pull the plug, everything will just collapse.”
It is estimated that large banks’ unrealized losses are about $300 billion, according to Federal Deposit Insurance Corporation data.
Banks’ portfolios largely consist of Treasury securities and agency mortgage-backed securities, as the industry went on a buying binge in the 2020–2021 COVID-19 pandemic era.
With interest rates rising at the fastest pace in four decades in response to climbing inflation—and remaining elevated over the past four years—the market value of these bonds has declined.
While these losses are realized only if the banks sell, they still matter for liquidity, capital ratios, and the Fed’s stress tests.
Expressing skepticism over inflation numbers, Maxim suggested that if the data were measured more accurately, conditions would likely be different.
The annual consumer inflation rate is above 4 percent and is expected to ease in the coming months amid lower energy prices.
Still, the new regime at the Fed could advance further banking deregulation, although he said he believes the Treasury Department should have a greater role in bank regulation.
“Congress has granted important functions to the Fed in bank regulation and supervision. I don’t believe the Fed is owed any particular deference in bank regulatory and supervisory policy,” Kevin Warsh, now the chairman of the Federal Reserve, wrote in an April 2025 op-ed for The Wall Street Journal.
“Fed claims of independence in bank matters undermine the case for independence in monetary policy.”