Five banks lowballed loan losses in latest DFAST
Banks project $23bn smaller hit to loan portfolios, with Wells Fargo and Citi the most off-target
Five of the US’s eight global systemically important banks (G-Sibs) lowballed the impact on their loan books in the event of a severe recession, with their internal models generating $23.3 billion in fewer loan losses than the Federal Reserve’s own assessment.
Through the nine-quarter-long severely adverse scenario – from end-2022 to March 2025 – drawn up by the Fed in this year’s stress test, Wells Fargo calculated it would have to book a cumulative $42.5 billion in loan and lease losses –
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