The Federal Reserve said the results of its second stress test of 2020 revealed that large banks are in a strong position to wither the pandemic and bear further economic downturn. Banks have “strong capital levels” and can “support the economy during economic downturns,” the Federal reported.
“Today’s stress test results confirm that large banks could continue to lend to households and businesses even during a sharply adverse future turn in the economy,” said Vice Chair for Supervision Randal K. Quarles.
Incumbent banks faired well against the Fed’s two hypothetical scenarios. The first one was where the economy suffered a deeper hit but recovered quickly. The second was if the economy took a shallower hit but endured a slower recovery.
In scenario one, the unemployment rate spi…