FED Issues Correction in Historical Dataset in its 2019 Stress Tests

By Regulatory News

February 13, 2019

Stress Testing: US, Stress Testing

FED identified an error in the historical dataset used in its 2019 stress tests and issued a correction. The mortgage rate in the fourth quarter of 2018 was originally published as 4.6% and should have been 4.8%. All other variables, both their historical values and projected values in the hypothetical scenarios, remain unchanged. The scenarios are not forecasts of FED.

On February 05, 2019, FED had released the scenarios that banks and supervisors will use for the 2019 Comprehensive Capital Analysis and Review (CCAR) and Dodd-Frank Act stress test (DFAST) exercises. Banks are required to submit their capital plans and the results of their own stress tests to FED by April 05, 2019. FED will announce the results of its supervisory stress tests by June 30, 2019.

CCAR evaluates the capital planning processes and capital adequacy of the largest U.S. bank holding companies and large U.S. operations of foreign firms, using their planned capital distributions, such as dividend payments and share buybacks and issuance. The Dodd-Frank Act stress tests also help ensure that banks can continue to lend during times of stress, but use standard capital distribution assumptions for all firms. Both assessments only apply to domestic bank holding companies and foreign bank intermediate holding companies with more than USD 100 billion in total consolidated assets.

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Keywords: Americas, US, Banking, Stress Testing, CCAR, DFAST, Stress Testing Scenarios, Correction in Historical Dataset, FED

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