A federal court yesterday granted a request by the Federal Reserve and a coalition of bank and business associations to extend an existing pause in litigation challenging the Fed’s stress testing framework.
Last year, the American Bankers Association joined the Bank Policy Institute, Ohio Bankers League and other trade groups in filing litigation against the Fed, challenging aspects of the stress testing framework the Fed uses to establish certain bank capital requirements. The lawsuit was filed in U.S District Court for the Southern District of Ohio.
In May, the parties requested a stay in the case, with the associations stating that the Fed is making a good-faith effort to align its stress testing regime with the law and establish transparency and accountability for that process. The court originally set an Aug. 1 deadline for the stay. The court yesterday granted the parties’ request to extend the stay, setting a new deadline of Oct. 15.
“The added extension gives the Fed time to fulfill its commitment to a more transparent and rational stress testing framework,” the plaintiffs said in a joint statement. “Stress testing supports a healthy financial system with robust lending to households and businesses, which makes it necessary to enact these reforms thoughtfully and without undue delay. We remain optimistic that the Federal Reserve will deliver on its promises, and we will continue to hold the Fed accountable until it does.”
