All 23 Major Banks Survive Fed's $541B Stress Test

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Banking News

Biggest Banks Survive $541B Fed “Stress Test”

In its annual stress test of the largest banks operating in the United States, the Federal Reserve found that all 23 would survive a hypothetical recession incurring about $541B in losses. The ‘test’ recession relied on a collapse of the housing market, namely a 40% drop in commercial real estate prices. “Exploratory market shocks,” which tested if banks could handle higher interest rates and inflation, were a new addition to the stress test this year.

Michael S. Barr, Vice Chair for Supervision at the Federal Reserve, said:

Fraudsters Stole 17% of All COVID-19 Relief Funds

Over $200B of the money distributed through EIDL and PPP programs were fraudulently claimed. Reasons for the high level of fraud include the rapid approval of applications for funding, the widespread public knowledge of PPP funding’s availability, and lack of oversight from regulators at the Small Business Administration (SBA). Arrests for fraud from COVID-19 relief programs number over 1,000 and investigations continue.

NCUA Strengthens CU Cybersecurity Measures

The methods taken to increase cybersecurity by the National Credit Union Administration (NCUA) and federally insured US credit unions were detailed in an NCUA report. These methods include hiring qualified information technology professionals, maintaining fraud-focused task forces, implementing regular training for all NCUA + FDIC-insured CU employees, and ongoing evaluation by regulatory committees. From this report, the NCUA anticipates guiding CUs to implement best practices to preserve their own data and private information.

AI & Blockchain

FedNow System Conspiracies Abound

The Federal Reserve’s move to create the FedNow system of instant payments has been labeled an effort by the federal government to create a CBDC and ‘enslave Americans.’ The Fed is preparing to launch the system in July. It’s coordinating the roll out effort along with fighting conspiracy theories spread on TikTok and popular podcasts. Officials are distributing marketing materials to clarify FedNow’s role and to indicate there is no plan for creating a CBDC in the foreseeable future.

Sen. Elizabeth Warren Promotes Banking Competition, Decries Mergers

The Democratic senator from Massachusetts is not in favor of promoting more commercial bank mergers. Sen. Warren (D-MA) prefers competition between smaller banks because mergers “pose increased systemic risk to the financial system.” In her letter to Janet Yellen and other regulators, Warren questioned if the Fed had learned its lesson from the collapse of SVB and other banks. She reasoned that more bank consolidations pose risks to the economy and the public.

Sen. Elizabeth Warren wrote: