The Federal Reserve told the 30 largest banks to test whether they could withstand a severe recession in the U.S. and other major economies with weakening housing markets, Bloomberg News reported yesterday. The most severe scenario outlined by the Fed includes a nearly 6.1 percent decline in U.S. gross domestic product in the first quarter of 2013 and an average unemployment rate of as much as 12.1 percent in the second quarter of 2014. Real disposable income contracts for five consecutive quarters, and house prices fall 21 percent from the third quarter of 2012 to the first quarter of 2015. The Fed will conduct its own tests on the 19 largest institutions, including Citigroup Inc., JPMorgan Chase & Co. and Bank of America Corp. The remaining 11 firms will test themselves and submit results to the Fed.
