[author: Steve Quinlivan]

The Federal Deposit Insurance Corporation, or FDIC, adopted a final rule regarding company-run stress testing required by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. The rule applies to covered institutions with total consolidated assets greater than $10 billion.

The final rule implements section 165(i)(2)(A) of the Dodd-Frank Act, which requires all financial companies with total consolidated assets of more than $10 billion that are regulated by a primary federal financial regulatory agency to conduct an annual company-run stress test. The final rule requires institutions with assets greater than $50 billion to begin conducting annual stress tests this year, although the FDIC reserves the authority to allow covered institutions above $50 billion to delay implementation on a case-by-case basis where warranted. The rule delays implementation for covered institutions with total consolidated assets between $10 billion and $50 billion until October 2013.

For institutions with assets greater than $50 billion that are required to begin stress testing this year, the FDIC anticipates releasing stress-testing scenarios in November. Institutions will use their data as of September 30, 2012, to conduct the stress test. Results are due in January 2013.

The FDIC Board also approved a final rule that refines the deposit insurance assessment system for insured depository institutions with more than $10 billion in assets. The final rule amends the definitions used to identify concentrations in higher-risk assets to better reflect the risk posed to institutions and the FDIC.

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