ABA and the Financial Services Roundtable urged the Federal Reserve to make several changes to its proposal for the next round of stress tests and capital planning exercises for large banks.
Specifically, the groups opposed the proposal to fix a bank holding company’s capital distributions on a quarter-by-quarter basis rather than the more flexible approach currently used. They also argued against adopting a standard for bank-developed stress test scenarios that are “at least as severe” as the Fed’s scenarios and suggested that the planning horizon for stress tests be shortened to eight quarters from the current nine.
The groups expressed support for the Fed’s proposal to change the timing of the stress test period for the largest banks.
Read the letter.