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Federal banking regulators on Monday provided fresh guidance on how the largest institutions should move ahead with their own routine stress testing exercises.
May 14 -
Federal Reserve Board Gov. Daniel Tarullo is set to meet Wednesday in New York with the top executives of several large banks, including JPM Chase's Jamie Dimon. The meeting will focus on the central bank's recent stress tests, among other things.
May 1
WASHINGTON — The Federal Reserve Board said Monday it is considering offering certain smaller-sized financial institutions more time before they have to undergo an annual stress test.
Responding to concerns raised by the industry, regulators suggested that bank holding companies, state member banks and savings and loan holding companies with total assets between $10 billion and $50 billion could be given until September 2013 to comply with a requirement that they conduct their own internal stress tests.
The Office of the Comptroller of the Currency and the Federal Deposit Insurance Corp. are also considering similar changes for their regulated institutions.
Under a proposal issued in December, all bank holding companies with more than $10 billion of assets would have to begin conducting stress tests once the rule was finalized. Savings and loan holding companies would be subject to stress tests as soon those firms faced minimum risk-based capital requirements.
But with the rule still not finalized, many institutions were worried about exactly when they would have to begin conducting these tests. In a press release issued Monday, the Fed said it was weighing giving banks a full year to prepare.
"A number of commenters on the proposal raised concerns about the proposed timing of compliance with the company-run stress test requirements, specifically questioning if all institutions would have the resources, readiness, and ability to conduct stress tests given the likely short period between publication of a final rule and the start of the stress testing process," the board said in a press release.
As a result, the Fed is considering delaying the effective date of the rule in order to give those companies "sufficient time to develop high-quality stress testing programs."
