January 08, 2019

FED proposed to modify company-run stress testing requirements to conform with the Economic Growth, Regulatory Relief, and Consumer Protection (EGRRCP) Act. The proposal is similar to the separate proposals issued by FDIC and OCC. The proposal would impact requirements for the reporting form FR Y-14 on Capital Assessments and Stress Testing. Comments will be accepted until February 19, 2019.

The proposal would:

  • raise the threshold requiring state-member banks to conduct their company-run stress tests from USD 10 billion in total consolidated assets to USD 250 billion.
  • require firms above the threshold to conduct company-run stress tests once every other year (in place of the current annual cycle).
  • eliminate the hypothetical "adverse" scenario from company-run stress tests for bank holding companies, state member banks, U.S. intermediate holding companies of foreign banking organizations, and any nonbank financial company supervised by FED.

Similarly, FED would no longer include an "adverse" scenario in its supervisory stress tests. The firms would still be required to test themselves against a more severe hypothetical scenario, known as the "severely adverse" scenario, and the supervisory stress tests also would continue to include a "severely adverse" scenario.

 

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Comment Due Date: February 19, 2019

Keywords: Americas, US, Banking, EGRRCP Act, Stress Testing, FR Y-14, Dodd Frank Act, FED

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