WASHINGTON — A top supervisory official at the Federal Reserve has announced his intention to retire this summer after the conclusion of this year’s round of stress tests.
Timothy Clark, who has been deputy director of the Federal Reserve’s division of supervision and regulation since 2008, will “stay on through the 2017" stress test cycle, the results of which are due by the end of June, and “depart during the summer,” a Fed spokesman said Monday.
Clark began his tenure with the Fed in 1995 as a bank supervisor at the New York Fed. He came to the Fed Board in 2008 as a senior adviser, later being named deputy head of the agency’s supervisory office. Clark also chairs the operating committee of the Large Institution Supervision Coordinating Committee, or LISCC, a panel created after the financial crisis to focus heightened supervisory scrutiny of the largest U.S. banks.
Clark’s tenure in Washington corresponded with the development of the Fed’s dual annual stress tests: the Comprehensive Capital Analysis and Review, or CCAR, and the Dodd-Frank Act Stress Test, known as DFAST. While there are important differences between the tests, both are meant to examine a bank’s resiliency by subjecting its balance sheet to an annual series of variably adverse hypothetical stress scenarios. Clark also oversaw the Fed’s Comprehensive Liquidity Analysis and Review program, a kind of stress test for liquidity.
While only DFAST was mandated by Dodd-Frank (and carries no penalty for banks whose capital levels fall below the mandated minimum levels), CCAR has been viewed as the more binding of the two tests. Banks whose capital levels fall below one of the many minimum capital standards can be barred from issuing dividends until they pass, making the program a target for lawmakers seeing regulatory reform.
Former Fed Gov. Daniel Tarullo laid out a plan for modernizing the stress tests last September, but Clark’s departure makes the probability that such a plan might be embraced by the Fed less likely. The central bank has already moved forward with some reforms to the program, passing a rule exempting most of the covered firms from the qualitative aspects of the test.
Clark is the latest of a slew of longtime Fed officials who have announced their retirements in recent months. In addition to Tarullo’s departure last month, longtime Fed General Counsel Scott Alvarez announced he is retiring later this year.