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Fed freezes bank capital rules during stress-test overhaul

Fed freezes bank capital rules during stress-test overhaul

Rule Changes

The 2026 results passed 32 large lenders, but for the first time the scores won't change how much capital banks must hold.

Today: Results released, banks pass

Overview

Every year since the 2008 crisis, the Federal Reserve has graded big banks on a simulated disaster, and the score sets how much spare capital each must hold. On June 24, 2026, the Fed released the latest grades for 32 large lenders. All cleared the bar with room to spare.

This year the grade comes with an asterisk. The Fed is rewriting the secret models behind the test after banks sued, so the 2026 results won't change anyone's capital requirement. The current cushions stay frozen until 2027. That gives banks a clearer runway to pay dividends and buy back stock.

Why it matters

Pass the test and a bank can return billions to shareholders; the frozen rules let lenders plan buybacks and dividends with less guesswork than usual.

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Key Indicators

32
Banks tested
Large U.S. lenders graded in the 2026 stress test.
10%
Peak unemployment in scenario
The hypothetical jobless rate banks were tested against.
-39%
Commercial real estate drop
Assumed fall in commercial property values in the test.
-30%
Home price drop
Assumed decline in house prices under the scenario.
2027
Year rules change next
Capital cushions stay frozen until revised models take effect.

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People Involved

Michelle Bowman
Michelle Bowman
Leading the stress-test overhaul
 Jamie Dimon
Jamie Dimon
Raised dividend and announced new buyback after results

Organizations Involved

Board of Governors of the Federal Reserve System
Board of Governors of the Federal Reserve System
Central Bank and Bank Regulator
Running the test while rewriting its models

The U.S. central bank, which sets monetary policy and supervises large banks.
Bank Policy Institute
Bank Policy Institute
Industry Trade Group
Co-plaintiff in lawsuit that prompted the overhaul

A trade group representing large U.S. banks on regulatory policy.

Timeline

December 2024 June 2026

5 events Latest: Today
Tap a bar to jump to that date

  1. Results released, banks pass

    Today Results

    All 32 banks clear the test against a 10% unemployment scenario. JPMorgan raises its dividend and approves a roughly $30 billion buyback. The scores do not change capital requirements.

  2. Release date set

    Announcement

    The Fed says it will publish the 2026 stress-test results on June 24 at 4 p.m. Eastern for 32 large lenders.

  3. Capital buffers frozen until 2027

    Decision

    The Fed finalizes the 2026 scenario and votes to keep current capital requirements unchanged until 2027 while it revises its models.

  4. Fed proposes opening the black box

    Regulation

    The Fed issues formal proposals to disclose its stress-test models for public comment and to average results over two years to cut volatility.

  5. Banks sue, Fed signals change

    Legal

    Industry groups sue the Fed over secret stress-test models. The same day, the Fed says it will seek public comment on making the test more transparent.

Historical Context

2 moments from history that rhyme with this story — and how they unfolded.

May 2009

First post-crisis stress tests, the SCAP (2009)

In the depths of the financial crisis, the Fed ran its first big stress test on 19 banks. Regulators found 10 needed to raise about $75 billion in new capital. The exercise, called SCAP, helped calm markets by showing which banks were sound.

Then

Banks raised the capital, and confidence in the system began to return.

Now

The test became an annual fixture and the model for how regulators police bank capital.

Why this matters now

It explains why the test exists and why its results move markets. The 2026 fight is over how that now-permanent test is run.

July 2010

Dodd-Frank Act mandates annual tests (2010)

Congress passed the Dodd-Frank Act after the crisis. It required the Fed to stress-test large banks every year and tied the results to how much capital each must hold. That link turned a one-off exercise into a yearly capital-setting machine.

Then

The Fed built a formal annual program with published scenarios.

Now

Stress-test scores became central to bank planning for dividends and buybacks.

Why this matters now

The law is why a test result dictates capital bills, the exact mechanism the banks' lawsuit and the Fed's overhaul now target.

Sources

(6)
+2
Federal Reserve Board Sullivan & Cromwell LLP American Bankers Association International Banker Federal Reserve Board Federal Reserve Board