Stress tests

Using stress tests as the capital benchmark in a reformed regulatory system could enable some forms of relief, but other rules should remain in place to ensure financial stability.

The recent decision by the Federal Reserve Board to exempt banks with less than $250 billion in assets from the qualitative aspects of the CCAR stress tests may be a sign of things to come, says Joo-Yung Lee, head of North American financial institutions at Fitch Ratings.

After questions arose after the 2016 Comprehensive Capital Analysis and Review stress test, the Fed said Thursday that it would not object to the bank’s resubmitted capital plan.

As banking leaders gain a more substantial policymaking role, they will have a greater impact if they stake out a clear position in favor of regulations that protect investors and depositors.

Congressional Republicans are weighing potentially broad changes to the stress test program, including alterations to the way the tests are performed and the consequences of failing them.

The House proposal establishes a 10% leverage ratio as the standard for bank strength, but it says nothing about the riskiness of the bank’s business or the size of its exposure to economic downturns.

Federal Reserve Chair Janet Yellen appeared Tuesday before an uncommonly collegial hearing of the Senate Banking Committee, but the lack of outward drama masked the fact that lawmakers from both parties were using her testimony to lay the groundwork for a broader battle over the future of regulatory reform.

Federal Reserve Chair Janet Yellen appeared Tuesday before an uncommonly collegial hearing of the Senate Banking Committee, but the lack of outward drama masked the fact that lawmakers from both parties were using her testimony to lay the groundwork for a broader battle over the future of regulatory reform.

A House plan to provide regulatory relief will be more far-reaching when it is reintroduced soon by rendering the consumer protection agency toothless and providing banks with extra incentives to opt into a deregulatory plan.

The Federal Reserve published the hypothetical stress scenarios it will use as part of the 2017 stress test cycle.