Fed hands banks win with ‘stress test’ overhaul

‘The U.S. Federal Reserve on Friday advanced an overhaul of its annual “stress tests” of large banks, handing the industry a long-sought win over an exercise that they complain is opaque and onerous.

- CORRESPONDENT

‘The proposal that the Fed’s Board of Governors approved will hand banks significantly more information about how the U.S. central bank conducts the annual exam by disclosing and soliciting feedback on once-confidential models, as well as making public its process for concocting hypothetical economic downturns each year as the basis for the test.

Fed Vice Chair for Supervision Michelle Bowman, who is leading the effort as the central bank's top regulatory official, touted the effort as providing overdue transparency to the exercise, which helps set large bank capital levels each year.