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The Supervisory Capital Assessment Program, publicly described as the bank stress tests (even though a number of the companies that were subject to them were not banks), was an assessment of capital conducted by the Federal Reserve System and thrift supervisors to determine if the largest U.S. financial organizations had sufficient capital buffers to withstand the recession and the financial ...
This list covers formal bank stress testing programs, as implemented by major regulators worldwide. It does not cover bank proprietary, internal testing programs. A bank stress test is an analysis of a bank's ability to endure a hypothetical adverse economic scenario. Stress tests became widely used after the 2008 financial crisis. [1]
Dodd–Frank Act imposes forward-looking stress testing of a bank's capital structure on a quantitative basis via models. Model risk management guidance has been provided by the Federal Reserve and the Office of the Comptroller of Currency in SR 11-7.
Furthermore, the Federal Reserve has continued to advance their expectations and adopt more complex scenarios in bank stress testing. [ 9 ] Statistician and risk analyst Nassim Taleb has advocated a different approach to stress testing saying that stress tests based on arbitrary numbers can be gamed.
A Federal Reserve Bank is a regional bank of the Federal Reserve System, the central banking system of the United States. There are twelve in total, one for each of the twelve Federal Reserve Districts that were created by the Federal Reserve Act of 1913. [ 1 ]
Since FDIC is a limited insurance pool they are highly concerned with any rise in bank failure rates. In the same period various other regulators began official stress testing of large banks, with the results often publicly disclosed. See Stress test (financial), List of bank stress tests, List of systemically important banks.
In the United States, the largest banks are regulated by the Federal Reserve (FRB) and the Office of the Comptroller of Currency (OCC). These regulators set the selection criteria, establish hypothetical adverse scenarios and oversee the annual tests. 19 banks operating in the U.S. (at the top tier) have been subject to such testing since 2009.
The Fed is looking to make “comprehensive changes” to its annual stress test for banks in 2025. The stress test is important in helping evaluate the resilience of large banks in the event of a ...