Federal Reserve Finalizes Stress Test Scenarios, Maintains Capital Requirements

Fed Banking Regulation

Published February 4th, 2026

Detected March 14th, 2026

Summary

The Federal Reserve Board has finalized its annual stress test scenarios for large banks and voted to maintain current stress test-related capital requirements until 2027. The final scenarios are similar to those proposed in October, and the delay in new capital requirements will allow for public feedback on supervisory models.

View original document View source feed page

What changed

The Federal Reserve Board has finalized the hypothetical scenarios for its annual stress test, which assesses the resilience of large banks. These scenarios are largely unchanged from the October proposal. Concurrently, the Board voted to maintain existing stress test-related capital requirements until 2027, allowing time to incorporate public feedback into the calculation of new requirements based on updated supervisory models.

This action means that large banks will continue under current capital buffer requirements for the upcoming stress test cycle. The finalized scenarios will dictate the economic conditions against which banks must demonstrate their capital adequacy. Compliance officers should note that while the scenarios are finalized, the capital buffer requirements will remain stable until 2027, at which point new requirements will be implemented following a public comment period on the revised models. The stress test itself will evaluate 32 banks against a severe global recession scenario.

What to do next

Review the finalized stress test scenarios for the 2026 cycle.
Prepare for the annual stress test using the finalized scenarios.
Monitor future Federal Reserve communications regarding the development of new stress capital buffer requirements post-2027.

Source document (simplified)

Press Release

February 04, 2026

Federal Reserve Board finalizes hypothetical scenarios for its annual stress test and votes to maintain the current stress test-related capital requirements until public feedback can be considered

For release at 4:30 p.m. EST

Share
- The Federal Reserve Board on Wednesday finalized the hypothetical scenarios for its annual stress test, which helps ensure that large banks can continue to lend to households and businesses even in a severe recession. The final scenarios are substantially similar to the scenarios proposed in October. Additionally, the Board voted to maintain the current stress capital buffer requirements until 2027, when new requirements can be calculated based on models that take public feedback into consideration.

"Waiting to calculate new stress capital buffer requirements until we receive public feedback will give us the opportunity to correct any deficiencies in our supervisory models based on that feedback," said Vice Chair for Supervision Michelle W. Bowman. "This should further improve the transparency, effectiveness, and fairness of our models and improve our accountability to the public."

The Board's annual stress test evaluates the resilience of large banks by estimating losses, net revenue, and capital levels under hypothetical recession scenarios that extend two years into the future. This year, 32 banks will be tested against a severe global recession with heightened stress in both commercial and residential real estate markets, as well as in corporate debt markets. The scenarios are not forecasts and should not be interpreted as predictions of future economic conditions.

In the 2026 stress test scenario, the U.S. unemployment rate rises nearly 5.5 percentage points, to a peak of 10 percent. The unemployment rate increase is accompanied by severe market volatility, a widening of corporate bond spreads, and a collapse in asset prices, including about a 30 percent decline in house prices and a 39 percent decline in commercial real estate prices.

Large banks with substantial trading or custodial operations are also required to incorporate a counterparty default scenario component to estimate potential losses from the unexpected default of the firm's largest counterparty amid an acute market shock. In addition, banks with large trading operations will be tested against a global market shock component that primarily stresses their trading and related positions. The final scenarios include two revisions to the global market shock component to improve consistency across shocks applied to similar exposures and enhance plausibility.

The table below shows the components of the annual stress test that apply to each bank, based on data as of the third quarter of 2025. The brief methodology document describes the Board's intention to generally use the same models as the 2025 stress test with limited model adjustments.

| Bank 1 | Subject to global market shock | Subject to counterparty default |
| --- | --- | --- |
| Ally Financial Inc. | | |
| American Express Company | | |
| Bank of America Corporation | x | x |
| The Bank of New York Mellon Corporation | | x |
| Barclays US LLC | x | x |
| BMO Financial Corp. | | |
| Capital One Financial Corporation | | |
| The Charles Schwab Corporation | | |
| Citigroup Inc. | x | x |
| Citizens Financial Group, Inc. | | |
| DB USA Corporation | x | x |
| Fifth Third Bancorp | | |
| First Citizens Bancshares, Inc. | | |
| The Goldman Sachs Group, Inc. | x | x |
| HSBC North America Holdings Inc. | | |
| Huntington Bancshares Incorporated | | |
| JPMorgan Chase & Co. | x | x |
| KeyCorp | | |
| M&T Bank Corporation | | |
| Morgan Stanley | x | x |
| Northern Trust Corporation | | |
| The PNC Financial Services Group, Inc. | | |
| RBC US Group Holdings LLC | | |
| Regions Financial Corporation | | |
| Santander Holdings USA, Inc. | | |
| State Street Corporation | | x |
| Synchrony Financial | | |
| TD Group US Holdings LLC | | |
| Truist Financial Corporation | | |
| UBS Americas Holding LLC | | |
| U.S. Bancorp | | |
| Wells Fargo & Company | x | x |
1. The information listed in this table is based on third quarter 2025 data. Return to text