Fed to Further Overhaul Bank Stress-Testing Regime

The Federal Reserve plans to broaden its plan to ease stress tests for the nation’s largest banks with a revised proposal that could reduce the chance banks fail the annual assessments.

Source: WSJ - Lalita Clozel | Published on November 9, 2018

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Fed Vice Chairman of Supervision Randal Quarles in a Friday speech said the agency was considering changes to an existing plan to revamp the stress tests, including making the test scenarios more consistent from year to year and giving firms their results before they wrap up shareholder return plans.

“It is prudent to review all our practices to ensure that they are as efficient and transparent as possible and that they remain appropriate in light of changes in the industry that have been achieved,” said Mr. Quarles in prepared remarks for a speech in Washington.

The proposed changes “are not intended to alter materially the overall level of capital in the system or the stringency of the regime,” he added.