The central bank also noted that the banking system is sound but faces several challenges. The report precedes Federal Reserve Chair Jerome Powell's upcoming appearances on Capitol Hill.

The Federal Reserve's struggle in bringing inflation down from its current level to its 2% target may come down to how the government measures shelter costs in the U.S., leading some experts to question whether the problem is in the economy or in how it is measured.

Federal Reserve Chair Jerome Powell brushed away concerns that a second Trump presidency could imperil the central bank's independence.

Banking experts are divided on how regulators will reshape the capital overhaul and if reported revisions being floated by regulators will meet the banking industry's demands.

The plan from the Heritage Foundation, a group the first Trump administration was largely in line with, would shutter CFPB, break up HUD and raise FHA premiums.

The Federal Reserve attributes the uptick in simulated losses in this year's stress test examination to heightened risks on bank balance sheets and higher expense levels. Credit cards and corporate lending were top areas of concern for the central bank.

The suggested order would require Freedom Mortgage to pay $3.95 million to settle allegations that it botched its reporting of customer data to the watchdog.

Sen. Elizabeth Warren, D-Mass., an influential progressive member of the Senate Banking Committee, decried reported meetings between Federal Reserve Chairman Jerome Powell and large bank CEOs who want the Basel III endgame proposal weakened.

Federal Reserve Chair Jerome Powell says crushing inflation is the most important thing the Fed can do to reduce costs in the housing market. Some economists and policy specialists say higher rates are not the only tool at its disposal.

Consumer Financial Protection Bureau Director Rohit Chopra pushed back against a new argument posed by Senate Republicans that the bureau may only be funded if the Federal Reserve earns a profit.