The Federal Reserve released its 2026 annual stress test results on June 24, confirming that all 32 largest US banks passed the test by maintaining sufficient capital to withstand a severe economic downturn scenario [1, 2, 3, 4, 5, 6]. The updated stress capital buffer requirements will remain frozen until at least 2027, as the Fed revises its testing framework and seeks public feedback [2, 4, 5, 6].
The Fed's severely adverse scenario assumed a global recession causing over $708 billion in industry-wide losses. It projected a 10% unemployment rate, a 30% decline in home prices, and a 39% drop in commercial real estate prices [3, 4, 5, 6]. Under this scenario, the average Common Equity Tier 1 (CET1) capital ratio of the banks fell from 12.8% to 11.2%, well above the 4.5% regulatory minimum [4, 5, 6]. Losses by loan type included roughly $200 billion from credit cards, $160 billion from commercial and industrial loans, and $75 billion from commercial real estate loans [4, 5, 6].
Following the stress test release, several major banks announced increases in dividends and large share repurchase programs. JPMorgan Chase unveiled a $50 billion buyback plan and a 10% quarterly dividend increase to $1.65 per share, pending board approval and effective July 1 [3, 4, 6]. 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" [3].
Goldman Sachs raised its quarterly dividend by 11% to $5.00 per share [3, 4, 6]. U.S. Bancorp plans a 3.8% dividend increase to $0.54 per share starting in the third quarter of 2026, pending board approval. It reported a CET1 ratio of 10.8% as of March 31, 2026 [5]. CEO Gunjan Kedia said, "Trust is fundamental in banking, especially in uncertain times. Our long-term focus, disciplined risk management, and resilient business model enable us to navigate diverse economic scenarios and continue serving our customers, as confirmed by these stress test results" [5].
The Fed’s stress capital buffer requirements will not change until the overhaul of the stress testing process is complete. Revised capital rules, including the Basel III Endgame proposal expected later this year, could unlock billions in capital for banks to return to shareholders or invest [2, 3, 4, 6]. Vice Chair Michelle Bowman said the results "demonstrate the resilience of the US banking system to continue lending to households and businesses during severe shocks" [4, 5, 6].
