The Federal Reserve will test the strength of the largest U.S. banks by subjecting them to a hypothetical recession in which credit markets seize up and private-equity investments take a hit. The annual stress tests, in which 34 large banks must show how they would survive dramatic market and economic shocks, will feature a situation in which a severe global recession leads to “widespread defaults” on corporate loans, the Fed said Thursday.

Source: Wall Street Journal February 06, 2020 21:49 UTC