{"id":1527709,"date":"2022-06-24T11:35:28","date_gmt":"2022-06-24T15:35:28","guid":{"rendered":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/?p=1527709"},"modified":"2022-06-24T11:35:33","modified_gmt":"2022-06-24T15:35:33","slug":"federal-reserve-stress-test-shows-big-banks-will-be-fine-through-the-next-recession","status":"publish","type":"post","link":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/federal-reserve-stress-test-shows-big-banks-will-be-fine-through-the-next-recession\/","title":{"rendered":"Federal Reserve \u2018Stress Test\u2019 Shows Big Banks Will Be Fine Through The Next Recession"},"content":{"rendered":"<aside class=\"mashsb-container mashsb-main mashsb-stretched\"><div class=\"mashsb-box\"><div class=\"mashsb-count mash-medium\" style=\"float:left\"><div class=\"counts mashsbcount\">28<\/div><span class=\"mashsb-sharetext\">SHARES<\/span><\/div><div class=\"mashsb-buttons\"><a class=\"mashicon-facebook mash-medium mash-nomargin mashsb-noshadow\" href=\"https:\/\/www.facebook.com\/sharer.php?u=https%3A%2F%2Fwww.conservativenewsdaily.net%2Fbreaking-news%2Ffederal-reserve-stress-test-shows-big-banks-will-be-fine-through-the-next-recession%2F\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Facebook<\/span><\/a><a class=\"mashicon-twitter mash-medium mash-nomargin mashsb-noshadow\" href=\"https:\/\/twitter.com\/intent\/tweet?text=&amp;url=https:\/\/www.conservativenewsdaily.net\/breaking-news\/?p=1527709&amp;via=ConservNewsDly\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Twitter<\/span><\/a><a class=\"mashicon-subscribe mash-medium mash-nomargin mashsb-noshadow\" href=\"#\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Subscribe<\/span><\/a><div class=\"onoffswitch2 mash-medium mashsb-noshadow\" style=\"display:none\"><\/div><\/div>\n            <\/div>\n                <div style=\"clear:both\"><\/div><\/aside>\n            <!-- Share buttons by mashshare.net - Version: 4.0.47--><p>The <a href=\"http:\/\/dailywire.com\/topic\/federal-reserve\">Federal Reserve<\/a> announced on Thursday that the American <a href=\"http:\/\/dailywire.com\/topic\/banks\">banking<\/a> system is projected to be able to weather the next <a href=\"http:\/\/dailywire.com\/topic\/recession\">recession<\/a>.<\/p>\n<p>The central bank\u2019s <a href=\"https:\/\/www.federalreserve.gov\/newsevents\/pressreleases\/bcreg20220623a.htm\">stress test<\/a> of major financial institutions involved a scenario in which <a href=\"http:\/\/dailywire.com\/topic\/unemployment\">unemployment<\/a> rises up to 10% amid a decline in economic output. Because the banks have \u201cstrong capital levels,\u201d they can \u201ccontinue lending to households and businesses during a severe recession\u201d \u2014 despite weathering $612 billion in predicted losses.<\/p>\n<p>\u201cThe individual bank results from the stress test will factor directly into a bank\u2019s capital requirements, mandating each bank to hold enough capital to survive a severe recession,\u201d the Fed press release explained. \u201cIf a bank does not stay above its capital requirements, it is subject to automatic restrictions on capital distributions and discretionary bonus payments.\u201d<\/p>\n<p>In 2008, bank insolvency threatened to plunge the <a href=\"http:\/\/dailywire.com\/topic\/economy\">economy<\/a> into a deeper recession, forcing the federal government to <a href=\"https:\/\/www.investopedia.com\/insights\/too-big-fail-banks-where-are-they-now\/\">purchase toxic assets<\/a> from investment banks through the $700 billion Emergency Economic Stabilization Act. The Fed <a href=\"https:\/\/www.nytimes.com\/2022\/06\/23\/business\/fed-banks-recession.html\">began<\/a> conducting its annual stress test in 2011 after the financial crisis.<\/p>\n<p>The stress test comes as several economic phenomena \u2014 including <a href=\"https:\/\/www.dailywire.com\/news\/inflation-reaches-8-6-setting-new-four-decade-high\">record-breaking<\/a> inflation \u2014 have eroded <a href=\"https:\/\/www.dailywire.com\/news\/everything-is-too-high-right-now-in-west-philadelphia-residents-battle-inflation-and-gas-prices\">consumer<\/a> and <a href=\"https:\/\/www.dailywire.com\/news\/majority-of-manufacturers-predict-recession-within-the-next-year\">business<\/a> confidence. The stock market has also endured weeks of <a href=\"https:\/\/www.dailywire.com\/news\/wall-street-sees-worst-carnage-since-2020\">heavy losses<\/a>, with some analysts predicting that more <a href=\"https:\/\/www.dailywire.com\/news\/investment-banks-predict-how-much-more-stock-market-could-plummet\">falling asset prices<\/a> are in the near future.<\/p>\n<p>Earlier this week, Fed Chair Jerome Powell <a href=\"https:\/\/www.dailywire.com\/news\/fed-chair-jerome-powell-says-recession-is-a-possibility-but-remains-strongly-committed-to-killing-inflation\">testified<\/a> before members of the Senate that there is a \u201cpossibility\u201d of recession.<\/p>\n<p>\u201cAt the Fed, we understand the hardship high inflation is causing. We are strongly committed to bringing inflation back down, and we are moving expeditiously to do so,\u201d the policymaker explained. \u201cWe have both the tools we need and the resolve it will take to restore price stability on behalf of American families and businesses. It is essential that we bring inflation down if we are to have a sustained period of strong labor market conditions that benefit all.\u201d<\/p>\n<p>Last week, the Fed <a href=\"https:\/\/www.dailywire.com\/news\/federal-reserve-takes-most-aggressive-action-to-fight-inflation-in-three-decades\">increased interest rates<\/a> by 0.75% \u2014 the largest rate hike increment since 1994. The central bank already <a href=\"https:\/\/www.dailywire.com\/news\/the-fed-jacks-key-rate-up-half-point-as-inflation-surges\">hiked rates<\/a> by 0.5% in May \u2014 the largest such increase since 2000 \u2014 after a 0.25% rate hike from near-zero levels in March. Interest rates are now at 1.5% to 1.75%, with <a href=\"https:\/\/www.dailywire.com\/news\/expect-higher-unemployment-as-federal-reserve-tackles-inflation-warns-top-policymaker\">more increases likely<\/a> on the way.<\/p>\n<p>Rate hikes are intended to cut inflation by increasing the <a href=\"https:\/\/www.dailywire.com\/news\/the-federal-reserve-just-raised-interest-rates-how-will-it-impact-your-family\">cost of borrowing money<\/a> \u2014 a move that tends to slow economic activity. Many investors, however, have nevertheless urged the Fed to tighten its monetary policy.<\/p>\n<p>\u201cThe only way to stop today\u2019s raging inflation is with aggressive monetary tightening or with a collapse in the economy,\u201d Pershing Square Capital Management CEO Bill Ackman <a href=\"https:\/\/www.dailywire.com\/news\/top-hedge-fund-manager-sees-two-ways-out-of-soaring-inflation-and-neither-one-is-pretty\">said<\/a> last month. \u201cThere is no prospect for a material reduction in inflation unless the Fed aggressively raises rates, or the stock market crashes, catalyzing an economic collapse and demand destruction.\u201d<\/p>\n<p>Meanwhile, key policymakers have started to acknowledge that they <a href=\"https:\/\/www.dailywire.com\/news\/janet-yellen-admits-she-could-have-used-a-better-term-than-transitory-to-describe-unacceptable-inflation\">failed<\/a> to accurately predict soaring inflation. Treasury Secretary Janet Yellen admitted that she and Jerome Powell \u201ccould have used a better term than transitory\u201d to describe higher prices.<\/p>\n<p>\u201cThere\u2019s no question that we have huge inflation pressures, that inflation is really our top economic problem at this point and that it\u2019s critical that we address it,\u201d she told Congress earlier this month. \u201cI do expect inflation to remain high, although I very much hope that it will be coming down now.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"<p>The Federal Reserve announced on Thursday that the American banking system is projected to be able to weather the next recession. The central bank\u2019s stress test of major financial institutions involved a scenario in which unemployment rises up to 10% amid a decline in economic output. Because the banks have \u201cstrong capital levels,\u201d they can &#8230;<\/p>\n","protected":false},"author":99,"featured_media":1510513,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_mo_disable_npp":"","fifu_image_url":"","fifu_image_alt":"","footnotes":""},"categories":[],"tags":[],"class_list":["post-1527709","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry"],"_links":{"self":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts\/1527709","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/users\/99"}],"replies":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/comments?post=1527709"}],"version-history":[{"count":0,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts\/1527709\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/media\/1510513"}],"wp:attachment":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/media?parent=1527709"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/categories?post=1527709"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/tags?post=1527709"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}