Banking sector remains resilient, Fed reports

In its first Financial Stability Report of 2025, the Federal Reserve stated that the banking sector remains sound and resilient, with most banks maintaining capital levels well above regulatory requirements.

Key findings in the report include that vulnerabilities related to financial leverage remain notable:

• Broker-dealer leverage is low, but heightened client demand has increased balance sheet pressures for some dealers. 

• The banking system is sound, with capital levels above regulatory requirements.​

• Fair value losses on fixed-rate assets are significant and sensitive to interest rate changes.​

• Hedge fund leverage is at its highest level since 2013, though some positions have been unwound amid volatility.

Several potential risks to financial stability have been identified, including a U.S. economic slowdown, global economic growth decline, and cyberattacks. These risks could exacerbate existing vulnerabilities in the financial system.

• A U.S. slowdown, especially with rising interest rates, could strain household budgets and increase delinquencies. 
• A marked slowdown in global growth could lead to increased volatility and credit risks.​
• Cyberattacks significantly threaten market functioning and financial services, potentially leading to systemic disruptions.​

See the full Financial Stability Report from the Federal Reserve to learn more.