Overview

• All 22 of the largest U.S. banks passed the Fed’s 2025 stress tests under a scenario assuming a 30% drop in commercial real estate, a 33% fall in home prices and unemployment rising to 10%.
• Despite projected losses of more than $550 billion—including $158 billion in credit-card defaults and $124 billion in commercial-loan losses—banks maintained an average CET1 capital ratio of 11.6%, well above the 4.5% regulatory minimum.
• Successful test results authorize banks to proceed with increased dividends and share buybacks, and prompted a premarket rise in major bank stocks on Monday.
• The reduced severity of this year’s scenario compared with 2024 has drawn scrutiny from analysts and lawmakers, fueling Fed proposals to average stress test outcomes over two years to smooth capital requirement volatility.
• Final stress capital buffer requirements will be set in August after the Fed reviews public feedback on its stress test models and scenarios.