Federal Reserve

Fed stress-tests itself, and does alright

The Federal Reserve would pass the Fed's stress test ... according to the Fed.

That's the basic conclusion of a paper from three Federal Reserve Bank of San Francisco economists released Monday, just days after the Fed released the latest stress tests of the nation's largest commercial banks.

(Read more: Bove bullish after stress tests)

In "Stress Testing the Fed," Jens Christensen, Jose Lopez and Glenn Rudebusch conducted what they called a "probability-based stress test of the interest rate risk the Fed faces."

Their conclusions are positive for the central bank's long-term financial health.

"For example, there is only a remote chance that declines in Treasury bond prices could lead to mark-to-market losses on the Fed's portfolio. Such low probabilities for these adverse outcomes should assuage concerns about the Fed's portfolio holdings and income," they wrote.

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