Fed, OCC Release 2017 Stress Test Scenarios

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Feb 3 The Federal Reserve on Friday asked the largest US banks to measure how they would fare in a global recession with a high jobless rate as the central bank outlined the terms for its "stress test" of the largest USA lenders.

The 2017 scenario and background information can be found on the OCC's stress test website.

The Federal Reserve today released the three economic and financial market scenarios that it will use in the next round of the Comprehensive Capital Analysis and Review process for 34 of the nation's largest financial institutions, including one participating in CCAR for the first time.

Thirteen of the largest and most complex bank holding companies, including JP Morgan, Goldman Sachs, will be subject to both a quantitative evaluation of their capital adequacy and a qualitative evaluation of their capital planning capabilities. That would include US real GDP declining 6.5 percent from its pre-recession peak by the second quarter of 2018 and equity prices falling 50 percent by the end of 2017, unemployment peaking at 10 percent in 2018 and housing prices plummeting 25 percent during the scenario period.

Eight bank holding companies, State Street, BNY Mellon and the six listed above, will be required to incorporate a counterparty default scenario.

Banks are required to submit their capital plans and stress test results to the Fed by April 5.