All federally supervised banks and savings associations that have less than $250 billion in assets would be exempt from regulators’ company-run stress test requirements under proposed rules issued Tuesday to implement provisions of this year’s regulatory relief law.
The proposed rules, issued by the Federal Deposit Insurance Corp. (FDIC) and Office of the Comptroller of the Currency (OCC), are out for comment until Feb. 19. They affect national banks, federal savings associations, state nonmember banks, and state savings associations.
Both the FDIC and OCC have stress testing requirements in place under the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank), which requires stress testing for institutions with $10 billion or more in assets. The requirements are differentiated in current rules (also under Dodd-Frank) for institutions with $10 billion to $50 billion in assets, and those with more than $50 billion and involve three stress testing scenarios.
This is changing under the 2018 Economic Growth, Regulatory Relief, and Consumer Protection Act (EGGRCPA, S. 2155). The new law, enacted in May, raises the minimum asset threshold for the company-run stress testing requirement from $10 billion to $250 billion; replaces the requirement for banks to conduct stress tests “annually” with the requirement to conduct stress tests “periodically”; and no longer requires the “adverse” stress testing scenario (and thus reduces the number of required stress testing scenarios to two).
These amendments, which affect section 165(i)(2) of Dodd-Frank, take effect 18 months after enactment (in November 2019). The proposal would implement these changes and make the other technical conforming amendments related to previous agency actions.
The FDIC Board approved issuance of its proposed rule Tuesday during its open meeting; the OCC announced its proposal later that day.
FDIC proposed rule (draft Federal Register notice)
OCC proposed rule (draft Federal Register notice)