The Fed’s originally published scenario in February — upon which the “stress capital buffer” requirement will be based — is similar in “overall severity” to the most optimistic, V-shaped sensitivity analysis, Mr. Quarles said.
“You’re likely to get a smaller stress capital buffer using the February scenario,” said Jeremy Kress, a former Fed regulator who is now at the University of Michigan. He also said the fact that bank-by-bank results from the scenarios would not be released “makes me nervous about what they found.”
Banks went into this crisis with much higher levels of capital than they had heading into the 2007-9 downturn, and in better positions than many of their counterparts overseas. Despite that, the pandemic is an economic emergency without precedent, making it difficult to predict exactly how the financial system will fare.
The Fed has taken a number of actions to ensure that lending continues and credit does not become prohibitively expensive, relaxing some regulations while rolling out a variety of emergency programs, including several that buy loans to qualifying small and medium-size businesses from bank balance sheets.
Even so, central bank officials have repeatedly warned that they and Congress might need to do more to make sure the economy can recover as huge risks persist.
“Lives and livelihoods have been lost, and uncertainty looms large,” the Fed chair, Jerome H. Powell, said in remarks prepared for delivery Friday afternoon. “We will make our way back from this, but it will take time and work,” he said, noting that “the path ahead is likely to be challenging.”
Mr. Rosengren was even starker in his warnings. He pointed out that coronavirus cases in South Carolina and Florida were rising, and offered a glum outlook for unemployment, which he said was likely to remain “in double digits” through 2020. It stood at 13.3 percent in May, higher than at any point in the Great Recession.