WASHINGTON — Federal regulators on Tuesday finalized measures requiring annual stress tests for all medium- and large-sized banks.
Under the Dodd-Frank Act, banks with more than $10 billion of assets must meet annual stress-test requirements established by their primary federal regulator. The requirements accompany separate provisions in the financial reform law instituting stress-test procedures — managed by the Federal Reserve Board — for systemically important companies.
At a morning meeting, the Federal Deposit Insurance Corp. board of directors approved a final rule similar to its January proposal. The Office of the Comptroller of the Currency and Federal Reserve Board are expected to finalize their own rules on Tuesday.
Each year, banks subject to the regulation will have to conduct tests to assess the effects on their earnings, losses and capital of imagined adverse scenarios put forth by the FDIC. The FDIC estimated that about 25 banks under its watch will have to comply.
Yet the FDIC also made certain key modifications.
The final rule includes steps allowing firms to coordinate timing of disclosure of bank-level test results with those required for their parent holding companies. The FDIC also will allow more time for banks with between $10 billion and $50 billion of assets to be in compliance with the stress-test requirements, compared with those with more than $50 billion.
Generally, the largest banks will have to start completing tests based on call-report data from Sept. 30 of this year.
"I believe the implementation timeline in the final rule strikes the right balance," Comptroller of the Currency Thomas Curry said at the FDIC board meeting.