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Federal Reserve Publishes Summary Instructions for 2013 Dodd-Frank Company-Run Mid-Cycle Stress Tests

Today, the Federal Reserve published instructions to the 18 large U.S. bank holding companies (BHCs) that are required to submit the results of their Dodd-Frank company-run, mid-cycle stress tests to the Federal Reserve on July 5, 2013.

The Dodd-Frank Act and the Federal Reserve’s implementing regulations require large BHCs and non-bank financial companies that are designated as systemically important by the Financial Stability Oversight Council (FSOC) to conduct two company-run stress tests each year.

Internally-developed Stress Scenarios:  For the mid-cycle stress test, which is being conducted for the first time in 2013 by 18 BHCs, each BHC develops its own baseline, adverse and severely adverse scenarios to best reflect its individual operations and risks.  …  Read More

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Federal Reserve Governor Tarullo Delivers Speech Setting Forth Roadmap for U.S. Prudential Regulatory Reforms

Today, Federal Reserve Governor Daniel K. Tarullo delivered a speech setting forth a roadmap for prudential regulatory reforms in the United States.  Among other things, Governor Tarullo:

  • U.S. Basel III:  Appealed to other U.S. bank regulators to approve the U.S. Basel III final rules to avoid further implementation delays, noting that they can always seek further changes down the road.
  • Leverage Ratio:  Suggested that the Federal Reserve may require the largest U.S. firms to maintain a Basel III leverage ratio greater than the 3% agreed upon by the Basel Committee.
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Advanced Approaches Capital Rules: Federal Reserve Issues Guidance for Independent Verification of a Banking Organization’s Advanced Approaches Systems

The Federal Reserve’s Basel Coordination Committee has issued guidance to advanced approaches banking organizations regarding the governance and the control environment for their advanced approaches systems.   The guidance provides that the governance and control environment should incorporate independent verification and promote the accuracy of inputs to risk-based capital calculations and the banking organization’s overall safe and sound operations.

Background:  The advanced approaches capital rules, originally adopted by the U.S. banking agencies in 2007, apply to the largest and most internationally active U.S.…  Read More

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