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Monday, November 4, 2013

Fed Releases Stress-Test Scenarios for Largest Banks

The Federal Reserve has released the three economic and financial market scenarios that it will use in the next round of stress tests for the nation’s 30 largest financial institutions—12 of which will be participating for the first time. The three scenarios—baseline, adverse and severely adverse—include 28 variables such as unemployment, exchange rates, prices and interest rates.

Banks with $50 billion or more in assets are subject to the stress tests as part of the Fed’s Comprehensive Capital Analysis and Review program. Six banks with large trading operations will participate in an additional test of reactions to a global market shock, and eight banks for the first time will be required to incorporate a counterparty default scenario.

The OCC also released stress-test scenarios and instructions on Friday.

Read the Fed’s press release.
Read the OCC’s guidance.

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