The Federal Reserve released the results of its 2026 annual stress test on June 24, finding all 32 of the largest US banks passed the evaluation designed to measure resilience to severe economic conditions [1, 2, 3]. The largest banks tested, including JPMorgan Chase, Bank of America, Goldman Sachs, and Morgan Stanley, showed they could withstand a global recession scenario with unemployment rising to 10% and steep declines in real estate prices [2, 3, 4].
The 2026 stress scenario projected losses exceeding $700 billion industry-wide, including $200 billion in credit card defaults, $160 billion in commercial and industrial loan losses, and $75 billion in commercial real estate losses [3, 4]. Despite these heavy losses, the aggregate common equity Tier 1 capital ratio for the 32 banks declined by only about 1.6 percentage points, dropping from around 12.8% to a low of 11.2%, well above the 4.5% regulatory minimum [3, 5].
Unlike prior years, the Fed announced in February it would freeze stress capital buffer requirements through 2027 amid revisions to the stress testing framework, so results will not affect capital requirements yet [2, 4]. Nevertheless, several major banks moved swiftly to raise dividends and authorize stock buybacks following the report. JPMorgan Chase authorized $50 billion in buybacks and a 10% dividend increase to $1.65 per share. Goldman Sachs raised its dividend by 11%, and Morgan Stanley approved a 15% dividend increase and $20 billion buyback [3, 6, 4]. Wells Fargo and State Street also announced dividend hikes around 10% [3].
JPMorgan CEO Jamie Dimon said, "The Board's intended dividend increase is supported by our consistent investment in our business and strong financial performance. As always, we are prepared for a wide range of scenarios, including the hypothetical 2026 supervisory severely adverse scenario" [6]. U.S. Bancorp plans a 3.8% quarterly dividend increase to $0.54 per share, pending board approval, with a CET1 ratio at 10.8% as of March 31, 2026 [5]. Its CEO Gunjan Kedia emphasized that the bank’s rigorous risk management and resilient business model help it serve customers through varied economic situations [5].
Federal Reserve Vice Chair for Supervision Michelle Bowman said, "Today’s results underscore the strength of the banking system" and highlighted the resilience demonstrated by the industry [3].
The Fed tested banks with assets over $100 billion to evaluate capital adequacy amid a severe recession, finding all remained above minimum levels despite significant stress losses [2, 3]. The next stress test results release is expected in mid-2027, following updated methodologies and regulatory guidance.
