The Federal Reserve Board approved revisions to its annual stress tests on Sept. 30 in a 6-1 vote, a move described in the source report as a major win for large Wall Street lenders. Michelle Bowman, the Fed’s vice chair for supervision, said in a statement on Wednesday that stress tests remain an important part of the capital framework and that the changes are designed to make the process more transparent, more detailed, and more sensitive to risk while preserving its strength. The Fed also said the two final rules are largely consistent with proposals put forward in 2025, which had been welcomed by the banking industry at the time. The annual stress test was introduced after the 2008 financial crisis to gauge how Wall Street lending institutions would hold up under a hypothetical recession scenario. Separately, the central bank is seeking comment on a plan intended to better reflect differences in how banks generate fee income across their business models.
The Federal Reserve Board voted 6-1 on Sept. 30 to approve revisions to its annual stress tests, according to BlockBeats. The move was described as a major win for large Wall Street lending institutions.
Bowman says changes will improve transparency
Michelle Bowman, the Federal Reserve’s vice chair for supervision, said in a statement on Wednesday: 「Stress tests are an important part of our regulatory capital framework, and today’s reforms preserve their strength by ensuring that the tests are more transparent, more granular, and more risk-sensitive.」
Final rules largely match the 2025 proposal
The Fed said the two final rules are largely consistent with the rules proposed in 2025. Those proposals were welcomed by the banking industry at the time.
The stress test framework was set up after the 2008 financial crisis to assess how Wall Street lenders would perform under a hypothetical economic downturn.
Separately, the Fed is also seeking comment on a plan intended to 「better reflect differences in banks’ business models in generating fee income.」
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