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Details on new round of bank stress tests released

The Federal Reserve Board released details on Thursday about a second round of stress tests for big banks, an exercise which will evaluate and provide more information on their resiliency concerning lending during economic downturn.

A new round of bank stress tests was announced Thursday by the Federal Reserve, the board releasing its set of hypothetical scenarios to be used to measure the resiliency of big banks.

This is the second round of bank stress tests this year the Federal Reserve has conducted. This new round, unlike the first, will release the results of the tests for each bank, rather than providing aggregate results for the group, reports The Wall Street Journal.

Earlier this year, the Federal Reserve’s first round of stress tests found that large banks were well capitalized under a range of hypothetical events, according to a Thursday news release from the board.

The second round of stress tests are being performed due to the continued uncertainty from COVID-19.

Large banks will be tested against two scenarios featuring severe recessions to assess their resiliency under a range of outcomes, according to the release.

Firm-specific results from banks’ performance under each hypothetical scenario is intended to be released by the end of this year.