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Jane Fraser, CEO of Citi, speaks during the Global Conference of the Milken Institute in Beverly Hills, California, on May 1, 2023.
Patrick T. Fallon | AFP | Getty images
Banking actions rose on Thursday after Federal Reserve released parameters for its annual stress test of the industry that shows smaller hypothetical shocks to the US economy than in previous years.
Although it is still challenging, with the unemployment of the United States rising to 10% and a 33% drop in housing prices, the 2025 exam has smaller peaks in unemployment and smaller decreases in stock values and goods Roots that the previous versions, said Jason Goldberg of Barclays in a note on Thursday in a note. Entitled “Stress test 2025: scenarios easier than the last two years”.
The Fed will soon take measures to “reduce the volatility of the results of the stress tests and begin to improve the transparency of the model” in the 2025 exam, said the regulator in a statement Launched on Wednesday after the closure of regular trade.
Actions of Citigroup He jumped 2.9% at noon from the negotiation, while Goldman Sachs, Morgan Stanley and Bank of America Each increased at least 1.5%. The big banks won more than the smallest lenders, with the KBW bank index 1.2% increase compared to 0.9% of the S&P regional bank ETF.
The changes in the stress test reinforce the case by the Wall Street analysts that the great US banks will face a more friendly regulatory regime under the Trump administration. From the sequels of the financial crisis of 2008, the largest American banks have had to undergo Annual exams That proves its ability to resist a severe recession while continuing to provide consumers and companies.
Banks have complained for years that annual stress tests were opaque and unjustly administered, and industry commercial groups sued the Fed In December for the exam.
When making the last iteration of the less challenging and more predictable test, banks could celebrate smaller capital cushions at the end of this year, according to Bank of America Ebrahim Poonawala.
“The 2025 stress test scenario, widely better in front of last year, increases our confidence that banks should begin to see relief in regulatory capital requirements, given our expectations of a change to a balanced, transparent regulatory regime And more predictable, “Poonowala wrote on Thursday in a note.
