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Fed to stress test banks against commercial real estate, corporate debt troubles in 2022 -Breaking

by Mike Robinson

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© Reuters. FILE PHOTO – The Federal Reserve Building is seen in front of the Federal Reserve Board. It is likely to announce plans to increase interest rates in March, as it focuses its efforts on fighting inflation. REUTERS/Joshua Roberts

WASHINGTON (Reuters), – On Thursday, the U.S. Federal Reserve said that their 2022 round large bank stress tests would include a significant decline in commercial realty prices and turmoil on corporate bond markets.

In the hypothetical recession that the Fed uses as the base of its tests, it also envisages 10% unemployment over the course of two years. The value of corporate debt, assets and commercial real estate could plummet by 40% in that time period. This test will apply to 34 banks that are the largest in the country.

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