February 12, 2019

OCC proposed amendments to its company-run stress testing requirements for national banks and Federal savings associations, consistent with section 401 of the Economic Growth, Regulatory Relief, and Consumer Protection (EGRRCP) Act. This consultation has been published in the Federal Register and comments on this consultation must be received by March 14, 2019. Earlier, on December 18, 2018, OCC had published text for the proposed rule on stress testing requirements, with a comment due date of February 19, 2019.

The proposed rule would make the following amendments:

  • Revise the minimum threshold for national banks and Federal savings associations to conduct stress tests from USD 10 billion to USD 250 billion
  • Revise the frequency by which certain national banks and Federal savings associations would be required to conduct stress tests
  • Reduce the number of required stress testing scenarios from three to two
  • Make certain facilitating and conforming changes to the stress testing requirements

EGRRCP Act, which enacted on May 24, 2018, amended certain aspects of the company-run stress testing requirement in section 165(i)(2) of the Dodd-Frank Act. Specifically, section 401 of EGRRCP Act raises the minimum asset threshold for financial companies covered by the company-run stress testing requirement from USD 10 billion to USD 250 billion in total consolidated assets. It also revises the requirement for banks to conduct stress tests “annually” and instead require them to conduct stress tests “periodically”; and no longer requires the OCC to provide an “adverse” stress-testing scenario, thus reducing the number of required stress test scenarios from three to two. The amendments made by section 401 of EGRRCP Act applicable to financial companies become effective eighteen months after EGRRCP Act's enactment. OCC is proposing to revise the OCC's stress testing rule, consistent with the amendments made by section 401 of the EGRRCP Act. The proposal would also make a few additional technical and facilitating changes to the stress testing rule.

 

Related Link: Federal Register Notice

Comment Due Date: March 14, 2019

Keywords: Americas, US, Banking, EGRRCP Act, Stress Testing, Dodd Frank Act, OCC

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