The Federal Reserve Board's annual bank stress test results reveal that large banks are well-prepared to weather a severe recession, maintaining capital levels above minimum requirements despite higher projected losses compared to last year. Vice Chair for Supervision Michael S. Barr emphasized the banks' ability to withstand a highly stressful scenario and meet minimum capital ratios. The stress test evaluates resilience by estimating capital levels, losses, revenue, and expenses under a hypothetical recession and financial shock. All 31 banks tested remained above their minimum requirements after absorbing nearly $685 billion in projected losses. Factors contributing to the larger capital decline this year include riskier credit card portfolios, higher corporate credit losses, and decreased income to offset losses. The Board also conducted an exploratory analysis, revealing that large banks can withstand funding and trading book stresses, underscoring their stability in facing hypothetical risks.