We have reviewed the final FRB stress-test standards for the nation’s largest BHCs to assess their impact on residential mortgages and the future of the GSEs.  As in the 2012 stress-test that caused the FRB to block some big-bank dividend payments, the final framework focuses on mortgage finance as a key risk driver.  However, until new models and scenarios are, at least in broad form, released next month, the degree to which the new tests will drive credit availability is, while likely dampening, still uncertain especially given the net-interest margin benefits big BHCs achieve through GSE securitization and certain other mortgage structures.

The full report is available to subscription clients.  To find out how you can sign up for the service, click here