The Federal Reserve said on Oct. 24 that it is requesting comments on proposals to overhaul annual stress tests for large banks.
Every year, the Fed conducts stress tests to ensure that large financial institutions maintain sufficient capital and can lend to businesses and households during harsh economic downturns.
Yearly stress tests became the norm following the global financial crisis almost 20 years ago. The chief objective of bank regulators and supervisors is to confirm that each institution maintains a larger stress capital buffer against potential losses.
In response to litigation, the Board of Governors approved a plan in December 2024 to improve the stress test’s efficacy and resilience. Officials are now pursuing public feedback….