Fed Proposes Rule to Harmonize Company-Run Stress Testing Requirements with S. 2155

The Federal Reserve today issued a proposed rule that would make changes to its framework for company-run stress tests to conform with Section 401 of the S. 2155 regulatory reform law.

Consistent with the law, the rule would raise the minimum asset threshold for state member banks to conduct their own stress tests from $10 billion to $250 billion. It would also generally require firms above $250 billion to conduct company-run stress tests once every other year rather than annually. Finally, it would eliminate the hypothetical “adverse” scenario from the test. Banks would still be required to rest themselves against the “severely adverse” scenario, and the “severely adverse” scenario will also remain a part of supervisory stress test, the Fed noted. Comments on the proposal are due Feb. 19. The OCC and FDIC released similar proposals for national banks and state nonmember banks, respectively, in December.