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Home Archive for category "Capital Planning & Stress Tests" (Page 4)
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Davis Polk Visuals of the Federal Reserve’s 2014 Stress Test Scenarios

Yesterday, the Federal Reserve issued three hypothetical, supervisory scenarios that will be used in the 2014 capital planning and stress testing cycle.  The OCC issued substantively identical scenarios.

The baseline, adverse, and severely adverse scenarios each include 28 variables (16 domestic variables and 12 international variables), including economic activity, unemployment, exchange rates, prices, incomes and interest rates. The 28 variables include all of the variables provided last year and two new domestic variables—the yield on the 5-year Treasury bond and the prime rate.…  Read More

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Federal Reserve Issues Interim Final Rules Clarifying How Banking Organizations Should Incorporate U.S. Basel III Standards Into Capital Plans and Dodd-Frank Stress Tests

Today, the Federal Reserve Board issued two interim final rules that clarify how U.S. banking organizations should incorporate the recently-adopted Basel III capital standards into their capital projections during the next cycle of capital plan submissions and Dodd-Frank stress tests, which will begin in fall 2013.

Blacklines Showing Changes:  We have created blacklines showing changes made by the interim final rules to the Federal Reserve’s existing capital plan and Dodd-Frank stress test regulations.  Links to these blacklines are at the end of this blog post.…  Read More

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Federal Reserve Publishes Paper on Capital Planning at Large Bank Holding Companies

Today, the Federal Reserve published a paper entitled Capital Planning at Large Bank Holding Companies: Supervisory Expectations and Range of Current Practice.  The paper is intended to promote better capital planning at large bank holding companies (BHCs) and to provide greater clarity on the standards against which those practices are evaluated as part of the Federal Reserve’s annual Comprehensive Capital Analysis and Review (CCAR).

The paper discusses the Federal Reserve’s expectations for capital planning at large BHCs and described the range of practices it has observed at these companies during the past three CCAR exercises. …  Read More

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U.S. Banking Regulators Propose Dodd-Frank Company-Run Stress Test Guidance for Mid-Sized Banking Organizations

Beginning this fall, many U.S. banking organizations will be conducting their first annual Dodd-Frank company-run stress tests.  Today, the U.S. banking regulators (Federal Reserve, OCC and FDIC) proposed guidance setting forth supervisory expectations for stress tests conducted by national banks, state member and non-member banks, savings associations, bank holding companies and savings and loan holding companies with total consolidated assets of greater than $10 billion and less than $50 billion (collectively, “mid-sized firms”).

The proposed guidance is intended to help mid-sized firms conduct stress tests that are appropriately scaled to their size, complexity, risk profile, business mix and market footprint. …  Read More

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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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Brown-Vitter Bill: Commentary and Analysis

The bill announced by Senators Sherrod Brown (D-Ohio) and David Vitter (R-La.) is the latest volley in the ongoing debate about whether financial reform has gone far enough in ending the risk that some banks are too big to fail. Although it is highly unlikely that the Brown-Vitter bill, in its current form, will become law, its erroneous assumptions and assertions, as well as the policy measures proposed by the bill, could resurface, either in other bills or as pressure on regulators to transform the financial regulatory landscape.…  Read More

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