Federal Reserve declares major banks resilient amid less rigorous stress tests

In June 2025, the Federal Reserve released the results of its annual stress tests for major banks in the United States, indicating that all 22 banks tested successfully passed the evaluation. This year's test was less rigorous compared to previous years, as it posed a more manageable economic scenario. The tests were designed to assess the banks' abilities to withstand severe economic downturns akin to those observed during the 2008 financial crisis. Despite a significant hypothetical loss of approximately $550 billion across the sector, the banks were projected to remain solvent and above the minimum operating thresholds. This favorable outcome is partly attributed to the Fed's decision to adopt a milder scenario, which included lower predicted declines in commercial real estate and housing markets, a less severe rise in unemployment, and reduced stock market volatility. In contrast, the previous year's test assessed more dire predictions, such as a 40% decline in commercial real estate prices and a 55% drop in stock prices. The reduction in test severity has raised questions about the Fed's rationale, especially in light of observed