"Despite delays and protests, compliance with myriad Dodd-Frank and Basel III rules will likely accelerate in the coming year - particularly those around mandated stress tests requiring banks to demonstrate protection from adverse economic pressures," writes American Banker's John Adams.
Eric Ebel, senior director of Moody's Analytics states, "With Dodd-Frank in place, many institutions are going through a significant transformation of the risk and compliance infrastructure, and that's where the solid infrastructure foundation can play an important role." Moody's Analytics provides stress testing modules.
Dodd-Frank will require most banks to hold more capital, change risk weightings, increase capital for off-balance sheet items and improve risk analysis. Stress testing will mean updates to the data that tracks and measures capital reserves, loan performance and the governance of mortgage origination and servicing.
Ebel provides three tips for banks to build out a stress testing infrastructure to handle compliance to additional disclosure requirements from the Dodd-Frank reform law.
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