FED Proposes to Amend Company-Run Stress Testing Requirements

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.

Related Links

• Press Release
• Proposed Rule (PDF)

Comment Due Date: February 19, 2019

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