Banks will have to withstand 10% unemployment in new Fed stress test
WASHINGTON (MarketWatch) - The Federal Reserve on Thursday released the hypothetical market storms designed to test the resilience of the U.S. banking system. The U.S. central bank comes up with three new scenarios each year. In the harshest environment this year, banks must show they can withstand a deep global recession in which the U.S. unemployment rate rises five percentage points to 10%, accompanied by corporate financial stress and negative yields on short-term Treasurys, the Fed said. "It is important that the tests not to be too predictable from year to year," said Fed Governor Daniel Tarullo in a statement. The 33 bank holding companies are required to submit their test results to the Fed by April 5. The U.S. central bank will publicly announce its findings by June 30.