Fed Overhauls Bank Stress Tests
The Federal Reserve finalized changes to its annual bank stress tests to increase transparency and reduce capital requirement volatility by half. The new framework averages results over two years and allows public feedback on models.
The United States central bank finalized an overhaul of its annual bank stress tests on Wednesday, aiming to cut year-over-year capital requirement volatility by 50%. The changes address years of lender complaints regarding opaque and subjective exam models. Aggregate capital levels will remain materially unaffected by the revisions.
