Analyst Note| Eric Compton, CFA |
The Federal Reserve has released the results from its second round of stress tests. As a quick reminder, the Fed released the results of a first round of tests in June as part of its normal schedule. However, as part of that process, because of the uniqueness of the economic situation during the pandemic, the Fed announced that it would perform an additional round of testing later in the year as a sort of double check to make sure the banking system had remained resilient as the pandemic developed. Based on the initial results from the first round of testing, and based on the updated scenarios that were later released, we didn’t expect this second round of tests to result in any additional capital restrictions for the banks covered and we expected all of the banks to pass. With the results now released, our initial predictions have been confirmed.