Federal Reserve Says All 22 Largest U.S. Banks Pass 2025 Stress Test, Clearing Path for Dividends and Buybacks

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Updated Jun 30, 2025, 02:24 PM

The Federal Reserve announced that all 22 of the largest U.S. banks successfully passed its 2025 annual stress test, demonstrating strong capital positions to withstand a severe recession scenario. The banks maintained capital ratios more than double the minimum requirements, with sufficient capital to absorb losses and continue lending to households and businesses. The stress test projected that the banks could collectively lose over $550 billion under a hypothetical severe economic downturn, including a 50% stock market decline and 10% unemployment rate, yet still remain above minimum capital thresholds.

The results have paved the way for these institutions to increase shareholder returns through higher dividends and stock buybacks. Shares of major banks such as Goldman Sachs, Wells Fargo, and Bank of America rose in premarket trading following the announcement. However, some analysts noted that the stress tests were less rigorous this year, with criticism that the scenarios did not fully account for rising inflation and interest rates during a recession. Despite these concerns, the Fed's findings underscore the resilience of the U.S. banking sector amid challenging economic conditions.

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Sources

ft.com(3)marketwatch.com(2)bloomberg.com(2)jp.reuters.com(2)

Eddy Elfenbein

@EddyElfenbein

US banks rise as Fed stress test success clears path for payouts

Mike Zaccardi, CFA, CMT 🍖

@MikeZaccardi

US bank stocks climb after stress tests signal bigger capital payouts @seekingalpha $GS adding 165pts to DJIA futures this morning

Markets Today

@marketsday

The Federal Reserve says America's biggest banks are strong enough to withstand a severe recession, clearing the way for higher dividends and stock buybacks In its annual stress test, the Fed found that 22 large banks would collectively lose over $550 billion in a hypothetical