Fed Says Banks Can Handle ‘Severe’ Recession With 10 Percent Unemployment, 55 Percent Stock Meltdown
America’s banks are resilient enough to withstand even a “severe” recession with unemployment soaring to 10 percent, the real estate market melting 40 percent, and stocks sinking 55 percent, the Federal Reserve said.
The Fed put dozens of America’s biggest banks under a “stress test” exercise to evaluate their resilience and ability to support a potential economic crash.
The stress scenario the central bank chose to put banks under in this year’s test was tougher than last year’s, the Fed said in a statement, with U.S. financial institutions getting a passing grade.
‘Severe Global Recession’
The hypothetical headwinds included a “severe” global recession with substantial stress on corporate debt markets and commercial real estate….
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