Stress test (CCAR)
BankingDefinition
Comprehensive Capital Analysis and Review. Annual Fed exam of major US banks under hypothetical adverse scenarios. Determines whether each can return capital (dividends + buybacks) given stress losses.
Failures embarrassing and market-moving. 2014: Citi failed; 2020: many banks paused buybacks; 2023: all major banks passed including the regional banks that failed weeks later (a notable false negative).
Failures embarrassing and market-moving. 2014: Citi failed; 2020: many banks paused buybacks; 2023: all major banks passed including the regional banks that failed weeks later (a notable false negative).