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The exam aims to gauge how Wall Street lenders would fare under a hypothetical shock to the financial system. Unlike other years, the 2026 results will not impact capital requirements as the Fed continues revising the tests to make them more bank-friendly.

As a result of that decision "there is no expectation that the firms delay until a particular time the public disclosure of their planned capital actions through the third quarter of 2027," the Fed said in a release Wednesday.

The exam this year assessed how 32 large lenders would withstand a severe global shock with heightened stress in both commercial and residential real estate markets in addition to corporate debt markets.

The hypothetical scenario included a severe global recession with a 39% decline in commercial real estate prices and a 30% decline in house prices. The unemployment rate also increased to a peak of 10% and economic output declined commensurately.

"Despite absorbing more than $708 billion in total loan losses under this year's hypothetical scenario, capital declined only 1.6 percentage points in aggregate, staying above minimum capital requirements," the regulator said.

The Fed pointed to three main factors that influenced the results of the 2026 test compared to a year prior. Projected capital decreases stemmed from higher loan losses due to increased loan balances and the increased severity of certain scenario variables. Lower projected unrealized gains in bank securities due to smaller hypothetical declines in interest rates tied to the scenario also pushed projected capital lower.

It also showed that projected capital increased from higher interest income due to recent bank financial performance and smaller hypothetical declines of interest rates during the scenario.

"Today's results underscore the strength of the banking system," Michelle Bowman, the Fed's top bank watchdog, said in a statement.

In recent years, Wall Street lenders have passed the test, clearing them to return billions of dollars to investors. JPMorgan Chase & Co., Citigroup Inc., Wells Fargo & Co., Goldman Sachs Group Inc. and Morgan Stanley all boosted their dividends after acing the exam in 2025.

Exam Overhaul

Bankers have complained for years that the stress test criteria are arbitrary and unrealistic, and force lenders to hold too much capital as buffers against losses. JPMorgan Chief Executive Officer Jamie Dimon denounced the process last year as a "waste of time."

The central bank said in December 2024 it would make changes to the tests. Later that same month, banking groups representing firms like JPMorgan and Goldman Sachs sued the agency, saying they want more transparency and input into how the rules are adopted.

The Fed has since moved to give lenders an early peek into criteria for upcoming exams and a chance to provide feedback on the scenario the regulator intends to use for the next test. Bowman has said the agency wanted to address the "excessive volatility in the stress-test results and corresponding capital requirements."

Industry groups have said the plans are a "welcome effort" but critics argue the changes would water down the test and turn it into an "open-book exam" where banks get to help pick the questions.

In February, the Fed finalized hypothetical scenarios for its stress test and voted to freeze the current stress capital buffer requirements until 2027 as it continues to overhaul the annual exam.

At that time, Fed Governor Michael Barr opposed the stress capital buffer extension and scenarios while Fed Governor Lisa Cook said she wanted to "reserve judgment."

In addition to revamping the stress test process and overhauling the agency's supervision unit, the Fed has moved to ease a series of other bank measures since President Donald Trump returned to the White House. If finalized, the plans would amount to some of the biggest bank-capital rule changes since those enacted following the 2008 financial crisis.