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Overall, however, the Fed said its "severely
adverse" scenario was largely similar to the one it had used in
its 2014 run of the so-called stress tests, mandatory for any
bank with assets of more than $50 billion.
The tests were introduced after the 2007-09 financial crisis,
and are an increasingly important part of the Fed's toolkit to
make sure the largest banks stay safe, and to avoid a repeat of
costly taxpayer bailouts.
The Fed can bar a bank from raising shareholder payouts such as
dividends or share buybacks if it fails to show it can survive
the three increasingly dire hypothetical economic scenarios used
in the stress tests.
Reuters reported last week that the Fed is also considering
using the tests as one of the tools it could use to prevent a
buildup of excessive financial risk in the system, though there
was no sign it would do so in 2015.
The Fed's medium-severe, or adverse scenario, assumed a pickup
in U.S. inflation and a resulting yield curve that was higher
and flatter than in the baseline scenario, making it different
from last year's adverse scenario.
(Reporting by Douwe Miedema; Editing by Peter Cooney)
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