Thu, 06 Feb 2025

Thu, 06 Feb 2025 Bank stocks pop after Fed releases 'easier' 2025 stress test, plans to make exam more predictable

The stress test changes bolster the case made by Wall Street analysts that U.S. banks will face a friendlier regulatory regime under the Trump administration.
The US Federal Reserve has released parameters for its annual industry stress test showing smaller hypothetical shocks to the economy than in previous years. The 2025 exam includes a 10% unemployment rate and a 33% drop in home prices, but with smaller spikes in joblessness and declines in stock and real estate values compared to past versions. This change is seen as a positive development for big banks, which could result in lower regulatory capital requirements later this year. Shares of major banks such as Citigroup, Goldman Sachs, Morgan Stanley, and Bank of America rose by at least 1.5% in midday trading, with the KBW Bank Index rising 1.2%. This move is seen as a sign that big US banks will face a friendlier regulatory regime under the Trump administration.
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