US Banks in Stronger Position to Lend During Major Recession

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US banks have been expanding their accumulations of capital and credit-worthiness, putting them in better shape to withstand the financial pressures of any major economic downturn, the US Federal Reserve Board said in a press release.

WASHINGTON (Sputnik) — Since 2009, the 33 banks have added more than $700 billion in common equity capital, the Federal Reserve noted.

"The nation's largest bank holding companies continue to build their capital levels and improve their credit quality, strengthening their ability to lend to households and businesses during a severe recession."

The latest series of stress tests supervised by the Federal Reserve indicated that loan losses at the 33 participating bank holding companies would total $385 billion during the nine financial quarters tested, the release continued.

"The ‘severely adverse’ scenario features a severe global recession with the domestic unemployment rate rising five percentage points, accompanied by a heightened period of financial stress, and negative yields for short-term US Treasury securities."

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