• The Fed recently released the results of its annual stress test on large banks in the U.S. and all 23 banks tested passed easily.
• Specifically, all 23 banks exceeded their minimum capital levels after being put through the ‘severely adverse scenario’ that envisioned a deep global recession, generating $541 billion in aggregate bank losses.
• Key factors in the stress test included a 6.4% rise in unemployment (peaking at 10%), a 40% decline in commercial real estate (CRE) prices, and a 38% decline in house prices.
• The results of the tests are comforting after the banking concerns that arose earlier this year. Moreover, while not subject to these tests, U.S. bank regulators are considering a range of actions to further strengthen the financial system including the potential for smaller banks to undergo annual testing as well.
• These test results demonstrate the robust creditworthiness of U.S. banks.

_{Source: LPL Financial}