The Fed's annual stress test showed that the 31 largest US banks could survive a decline of up to 40 percent in the value of commercial real estate, Reuters news agency reports.
The agency reminds that the continued weakness of the commercial real estate market has long raised uncertainty about the possible damage and possible impact on the condition of banks. Fed stress test allays concerns.
The test was also conducted for other catastrophic scenarios, such as a 36 percent decline in housing prices in the United States, or a 55 percent decline in stock markets. A scenario predicting an increase in unemployment in the US to 10 percent was also tested. Overall, the test was supposed to show whether the 31 banks have enough capital to cover losses totaling roughly $685 billion. dollars.
"In many ways, there should be reassurance that banks can weather a very strong storm," Chris Marinac, head of research at Janney Montgomery Scott, told Reuters.
He emphasized that the result of the test does not mean that the Federal Reserve Bank of America believes that the situation in the commercial real estate market is improving.