The Federal Reserve is developing “both exploratory macroeconomic scenarios and exploratory market shocks” for use in next year’s stress tests, Fed Vice Chairman for Supervision Michael Barr announced.
Now is the time to prepare, as tougher regulatory scrutiny of capital levels is coming.
The Federal Reserve announced individual capital requirements for banks with more than $100 billion in total consolidated assets.
ABA and the Bank Policy Institute petitioned the Federal Reserve to open for public comment both the supervisory models and stress scenarios that the agency uses to calculate binding capital requirements through its annual stress tests.
Large banks are well positioned to weather a severe recession and continue to lend to households and businesses even during an economic downturn, according to the results of Dodd-Frank Act-mandated stress tests, the Federal Reserve said.
In the U.S., stress tests could benefit from a different starting point besides increases in the unemployment rate, while the Swiss system demonstrates the value of greater transparency.
Federal Reserve Vice Chair for Supervision Michael Barr previewed potential changes that could come out of a “holistic review” of bank capital standards that the agencies are currently undertaking.
Large banks continued to maintain strong capital levels under a hypothetical severe global recession and substantial stress in commercial real estate and corporate debt markets, according to the results of Dodd-Frank Act-mandated stress tests, the Federal Reserve said yesterday.
Testifying before the Senate Banking Committee, Michael Barr—President Biden’s nominee to serve as Federal Reserve vice chairman for supervision—said that the “Fed’s authorities are quite limited [and] narrow” with regard to accelerating the transition to a lower carbon economy.
The Federal Reserve today released the hypothetical economic and financial market scenarios that it will use in the next round of stress tests for the nation’s largest financial institutions. This year’s stress tests will evaluate 34 large banks.