Three financial regulators are seeking comments on proposed guidance describing supervisory expectations for stress tests conducted by financial companies with total consolidated assets between $10 billion and $50 billion.
The Federal Deposit Insurance Corporation, Office of the Comptroller of the Currency and the Board of Governors of the Federal Reserve System noted that these medium-sized institutions are required to conduct annual company-run stress tests beginning this fall under rules the agencies issued in October 2012 to implement a provision in the Dodd-Frank Wall Street Reform and Consumer Protection Act.
To assist these companies in conducting stress tests appropriately scaled to size, complexity risk profile, business mix and market footprint, the agencies are proposing guidance to provide additional details for such institutions.
The stress test rules will allow flexibility to accommodate different approaches by various companies in the asset range. Additionally, the proposed guidance details general expectations for Dodd-Frank stress tests, and also provides examples of practices that would be consistent with those expectations.
The comment period on the proposed guidance will be open until Sept. 25.