The Federal Reserve Board has published two final rules with stress testing requirements for certain bank holding companies, state member banks, and savings and loan holding companies.
According to the Federal Reserve, the final rules implement sections 165(i)(1) and (i)(2) of the Dodd-Frank Act that require supervisory and company-run stress tests. Nonbank financial companies designated by the Financial Stability Oversight Council will also be subject to certain stress testing requirements contained in the rules.
‘Implementation of the Dodd-Frank stress test requirement is an important step in the Federal Reserve's efforts to promote the health of the financial sector,’ says Federal Reserve Governor Daniel K. Tarullo. ‘Stress testing is a key tool to ensure that financial companies have enough capital to weather a severe economic downturn without posing a risk to their communities, other financial institutions or to the general economy.’
The Federal Reserve will begin conducting supervisory stress tests under the final rules this fall for the 19 bank-holding companies that participated in the 2009 Supervisory Capital Assessment Program and subsequent Comprehensive Capital Analysis and Reviews. The final rules also require these companies and their state-member bank subsidiaries to conduct their own Dodd-Frank company-run stress tests this fall, with the results to be publicly disclosed in March 2013.