LOS TESTS DE STRESS DE LA FED Y LOS PROBLEMAS DE LOS BANCOS SUPERVISADOS

 Dario, July 2, 2025

2025 FED STRESS TEST REVEALS HOW TODAY’S FED IS COMPLICIT IN HIDING BANKS’ PROBLEMS

The Federal Reserve just released the results of its 2025 round of stress testing on 22 major US banks, and personally, I have never come across something more ridiculous and hypocritical. Let’s start with the fact that the FED itself admits how it found it appropriate to make this year’s test easier: “The only material changes to the models in the 2025 stress test are those that the Board began to phase in during the 2024 cycle, and the change in the treatment of private equity that was described in the December 30, 2024”

 

 Hold on a second, isn’t lending to Private Equity the largest balance sheet item by far, even beyond real estate lending, of many of the 22 banks surveyed? Yes, it is. According to the report “Growth of Bank Lending to Private Equity and Credit Funds” published by the Boston FED back in February this year, as per data shared by the banks during 2024 stress tests, total loan commitments to “Non-Bank Financial Intermediaries” (i.e., Private Equity firms) stood at 2.2 trillion USD or 32% of total loan commitments.

 

So, what did the FED do in the 2025 stress tests? Yes, it acknowledged the significant risk attached to banks’ lending toward NBFIs, saying:

“The NBFI stress is motivated by rapid growth in large bank credit commitments to NBFIs over the past five years, which reached about $2.3 trillion in the fourth quarter of 2024 at large banks. While total loans at large banks increased by 21 percent over this period, lending to NBFIs at large banks has grown by 56 percent. This rapid growth poses risks to banks, as certain NBFIs operate with high leverage and are dependent on funding from the banking sector.”

 “As part of the 2025 stress test, private equity exposures are removed from the global market shock component of the stress test. Instead, losses on these exposures are projected under the severely adverse macroeconomic scenario. This change better aligns with the characteristics of private equity exposures, which are principally long-term investments that are managed as banking book positions”

Let me just show you a sample of the most recent headlines about the state of the Private Equity sector:

• Where the next financial crisis could emerge
• Private Equity’s Liquidity Crisis Fuels a New M&A Gold Rush
• Buyout firms’ equity-debt double act is creaking
• Is private equity in trouble?
• Big investors look to sell out of private equity after market rout  

Here is the result of the FED stress test on NBFI exposure in its own words: “Under NBFI stress, the aggregate CET1 capital ratio is projected to fall by 1.6 percentage points to a minimum of 11.8 percent. Through the nine-quarter projection, total loan losses are estimated around $490 billion.” Please accept my apologies, but I truly struggle to come up with the math the FED used to translate 490 billion USD of potential losses into just a 1.6% decrease in the aggregate CET1 capital. Perhaps they used theorems and futuristic mathematical rules not yet available to common people like us. 

 

The most ridiculous part of all of this? The 490 billion USD of total projected losses from NBFI alone aren’t included in the total projected losses under the stress test, as I highlighted before and as you can see in the summary here.

 

Here is the result of the FED stress test on Hedge Fund and Trading Losses in case of a “market shock” scenario:

“The results of the exploratory market shock element suggest that the largest and most complex banks can withstand a market shock stemming from higher inflation expectations. Under the exploratory market shock scenario, trading losses at U.S. global systemically important banks (G-SIBs) are expected to be about $17 billion. Aggregate losses from the assumed default of the hedge funds are moderate, amounting to roughly $8 billion.”

If we consider the whole sample of 22 financial institutions part of the stress test, in the most adverse scenario, the FED projects a total of 44 billion USD losses related to trading and prime brokerage activity. I believe there is no need to describe these idiotic results further.

According to the FED stress test, Bank of America is expected to lose 23 billion USD under the most adverse scenario. What’s wrong with this? Well, this bank right now already has roughly 100 billion USD of “paper losses” in its books. More details in my latest article on this lender: “BANK OF AMERICA’S Q1-25 EARNINGS: MORE SMOKE AND MIRRORS TO HIDE ITS INSOLVENCY“.

I believe this is enough to prove without a shadow of a doubt how today’s FED is complicit in hiding banks’ problems rather than doing its job to fix them beforehand and avoid a financial catastrophe that at this point is just a matter of when it’s going to happen, not if it’s going to happen.

 

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On the 30th the FED did 2 REPO liquidity operations for 11.075bn$ - One extraordinary at 8:30am in morning BEFORE stocks open ONLY DISCLOSED AFTER MORE THAN 24h of 5.075bn$ and one at 1:30pm for 6bn$ https://t.co/VgrxvLAhfb

— Guillermo Ruiz Zapatero (@ruiz_zapatero) July 2, 2025

COMMERCIAL MORTGAGE-BACKED SECURITIES https://t.co/2GJnWEBs0I

— Guillermo Ruiz Zapatero (@ruiz_zapatero) July 2, 2025