Federal Reserve, FDIC and OCC Issue Stress Test Requirements

more+
less-
more+
less-

On November 15, the Federal Reserve Board, the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation (the Agencies) released interim guidance that describes how the Agencies will develop and distribute scenarios for use in annual stress tests required under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. The guidance “outlines the consultative processes that the Agencies will use to gather information on material vulnerabilities or salient risks and to coordinate with each other to develop the scenarios each year.” The scenarios include baseline, adverse and severely adverse scenarios. Each includes 26 variables, including economic activity, unemployment, exchange rates, prices, incomes and interest rates. The Agencies stated that “the adverse and severely adverse scenarios are not forecasts, but rather hypothetical scenarios designed to assess the strength and resilience of financial institutions.”

The implementing regulation required a covered institution with over $50 billion in average total consolidated assets to conduct its first stress test under the rule in September 2012. Institutions that are $10 to $50 billion in asset size must conduct their first stress test under the rule with data “as of” September 2013 with separate templates that will be forthcoming at a later date.

Section 165(i)(2) of the Dodd-Frank Act requires certain financial companies, including national banks and federal savings associations with total consolidated assets of more than $10 billion, to conduct annual stress tests.

To read more, click here and here.

http://www.corporatefinancialweeklydigest.com/2012/11/articles/banking/federal-reserve-fdic-and-occ-issue-stress-test-requirements/

 

Written by:

Published In:

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Katten Muchin Rosenman LLP | Attorney Advertising

Don't miss a thing! Build a custom news brief:

Read fresh new writing on compliance, cybersecurity, Dodd-Frank, whistleblowers, social media, hiring & firing, patent reform, the NLRB, Obamacare, the SEC…

…or whatever matters the most to you. Follow authors, firms, and topics on JD Supra.

Create your news brief now - it's free and easy »

All the intelligence you need, in one easy email:

Great! Your first step to building an email digest of JD Supra authors and topics. Log in with LinkedIn so we can start sending your digest...

Sign up for your custom alerts now, using LinkedIn ›

* With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name.
×
Loading...
×