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Tuesday, October 9, 2012

FDIC Approves Final Stress Testing Rule

The FDIC has announced publication of its final rule regarding company-run stress testing required by the Dodd-Frank Act. 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 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 delay implementation on a case-by-case basis where warranted. These institutions will use their data as of September 30, 2012, to conduct the stress test. Results are due in January 2013.

The rule delays implementation for covered institutions with total consolidated assets between $10 billion and $50 billion until October 2013.

The FDIC Board has 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.

The FDIC also updated its loss, income, and reserve ratio projections for the Deposit Insurance Fund (DIF) over the next several years and concluded that the DIF reserve ratio is on track to reach the statutory minimum target of 1.35% by the September 30, 2020, deadline.

Read the Stress Test Final Rule.
Read the Large Bank Pricing Final Rule.

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