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.
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.