ABA urged federal regulators to continue observing distinctions between medium and large banks as they develop Dodd-Frank-mandated stress testing procedures. Noting its appreciation for the agencies’ “flexible” approach and engagement of midsize banks, ABA last week recommended some changes to the stress-testing proposal issued in July.
ABA urged the FDIC, Federal Reserve and OCC to provide more clarity on what banks must do to validate models used by third-party vendors, to recommend vendors who can help with complex macroeconomic modeling, to clarify that a bottom-up approach is not required and to help train bank directors in their responsibilities, among others.
ABA’s recommendations came from its working group on midsize bank stress testing. The proposed guidance would cover banks with assets between $10 billion and $50 billion, which must conduct annual stress tests beginning this fall.
Read the letter.