Federal Reserve’s 2021 DFAST Results Again Demonstrate Resiliency of Large U.S. Banks

Washington, D.C. — BPI Executive Vice President and Head of Research Francisco Covas issued the following statement today in response to the release of the Federal Reserve’s Dodd-Frank Act Stress Tests results:

The June 2021 stress test results released today again demonstrated that large U.S. banks are highly resilient in the face of a very severe stress scenario. The scenario assumed that the unemployment rate would climb to 10.8 percent, exceeding the peak level reached in last year’s June stress tests. Furthermore, commercial real estate prices drop 40 percent over the planning horizon, and the stock market declines 55 percent. Due to the elevated capital levels of banks, all banks remained well above minimum capital requirements. As the Federal Reserve observes in its summary the average minimum common equity tier 1 capital ratio is more than double the banks’ minimum requirement. As a result, those banks will no longer be subject to restrictions on capital distributions beyond those envisioned by the stress capital buffer framework. These results also reflect the additional $90 billion in common equity tier 1 capital and $70 billion in allowances for credit losses that stress-tested banks have accumulated since the onset of the COVID event. Large banks therefore remain in an excellent position to continue to support the economic recovery as loan demand strengthens.

Francisco Covas, Executive Vice President and Head of Research at BPI


About Bank Policy Institute.

The Bank Policy Institute (BPI) is a nonpartisan public policy, research and advocacy group, representing the nation’s leading banks and their customers. Our members include universal banks, regional banks and the major foreign banks doing business in the United States. Collectively, they employ almost 2 million Americans, make nearly half of the nation’s small business loans, and are an engine for financial innovation and economic growth

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