WASHINGTON — The Federal Reserve has announced the schedule for releasing the results of the 2016 stress tests of the largest U.S. banks.
The Fed will announce the results of the Dodd-Frank Act Stress Test on June 23, the agency said, and will announce the results of the more vigorous and intensive Comprehensive Capital Analysis and Review stress test on June 29. Both results will be announced at 4:30pm.
DFAST and CCAR, as the stress tests are more colloquially known, are two of the most important tools for bank supervision to be added to the Fed's arsenal since the financial crisis. Both tests are required for banks with $50 billion or more in assets and examine a bank's performance in a hypothetical stress scenario. Thirty-three banks are participating in the stress testing exercise this year.
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Federal Reserve Govs. Jerome Powell and Daniel Tarullo Thursday said they expect banks to have to meet significantly higher capital minimums after the central bank applies its capital surcharge rule for large globally risky banks to its stress test. That difference could significantly cost banks.
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Federal Reserve Board Gov. Daniel Tarullo said Thursday that he anticipates the agency will eliminate the qualitative requirements in the annual stress testing program for most midsize banks as early as next year.
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The Federal Reserve is looking for advice and insight into how it might improve its annual stress testing regime, but banks and industry observers say the central bank is unlikely to touch the aspect of the tests that bothers them most: its secrecy.
December 28
DFAST runs a bank's balance sheet through the stress scenario with a universal capital plan — a sort of autopilot though the stress scenario. The purpose of that test is to more easily compare the results between banks. CCAR, meanwhile, uses the bank's own capital management plan during the stress scenario, thus more accurately ascertaining how the bank would actually perform. CCAR also involves qualitative examination of the banks' internal stress testing models.
There are no post-stress minimum capital requirements for DFAST, but banks are required to maintain at least the minimum capital levels in the CCAR tests. If a bank does not, it is forced to suspend dividend payments.
