Bank Capital Plans and Stress Tests: Federal Reserve Proposes a New Stress Testing Policy Statement, Several Enhancements to Supervisory Stress Test Model Disclosure and Amendments to its Stress Testing Scenario Design Framework

Sullivan & Cromwell LLP - December 12, 2017

On December 7, 2017, the Federal Reserve issued three proposals intended to increase the transparency, countercyclicality and risk coverage of its stress testing program, including for the stress tests applied to U.S. bank holding companies with total consolidated assets of $50 billion or more and U.S. intermediate holding companies of foreign banking organizations in connection with CCAR  and DFAST. Specifically, the Federal Reserve proposed a new stress testing policy statement, several enhancements to supervisory stress test model disclosure and amendments to its stress testing scenario design framework.