“Today’s CCAR results, together with the findings of the recent DFAST exercise, reflect the significant progress achieved since the financial crisis to improve the strength and resilience of the U.S. banking system. Since 2009, capital levels have doubled, liquidity has tripled, bank concentration has been significantly reduced, and regulators have successfully operationalized important new tools to address instability. As a result, the U.S. banking system has never been stronger and is now able to withstand the shock of even the highly unlikely severely adverse scenario imposed by CCAR."
To be sure, sufficient loss-absorbing capital is a critical aspect of any bank’s health and stability. But calls for ever higher capital overlook the significant system-strengthening progress made to date, as well as the reality that additional capital is not without costs or consequences.