WASHINGTON — The Federal Reserve Board announced Friday that it is forming an outside council of academics to provide advice on its process of stress testing bank balance sheets.
More specifically, the six-member group will provide input on the central bank's efforts to assess the effectiveness of the models it uses in the stress tests, the Fed announced in a
"The council is intended to improve the quality of the Federal Reserve's model assessment program and to strengthen the confidence in the integrity and independence of the program," the press release stated.
The announcement came after Citigroup (NYSE:C)
The new group, called the Model Validation Council, will be chaired by Francis Diebold, a University of Pennsylvania economics professor.
Other members are Peter Christoffersen of the University of Toronto; Mark Flannery of the University of Florida; Philippe Jorion of the University of California-Irvine; Chester Spatt of Carnegie Mellon University; and Allan Timmermann of the University of California-San Diego.
The Fed also announced that it will hold a symposium on stress testing models Sept. 13-14 at the Federal Reserve Bank of Boston. The symposium will feature experts from both the banking industry and academia, as well as from the Fed.
Finally, the Fed released a 20-page set of
