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ARTICLE · 11 DECEMBER 2017

FRB Requests Comment On Proposals To Enhance Stress Testing Transparency

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The Board of Governors of the Federal Reserve System ("FRB") requested comment on three proposals designed to improve the transparency of its stress testing procedures.

United StatesFinance and Banking
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The Board of Governors of the Federal Reserve System ("FRB") requested comment on three proposals designed to improve the transparency of its stress testing procedures.

One proposal would provide for enhanced disclosure of the models used by the FRB in its supervisory stress tests including:

  • Additional detail on the structure of a particular model in addition to key loan characteristics and macroeconomic variables that influence the results of the model.
  • Modeled loss rates on groups of loans with distinct characteristics, as well as summary statistics associated with the loans in each group. This will allow firms to compare characteristics of their own portfolios to those of the aggregate portfolio for all firms that are stress tested.

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