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U.S. Fed to Reconsider ‘Stress Capital Buffer’ Plan - ABI

Randal Quarles, head of supervision at the Federal Reserve, said on Friday the central bank would re-propose aspects of a bank capital rule known as the “stress capital buffer” due to industry concerns, Reuters reported. Quarles said that the regulator should also ease a key element of its annual stress tests that allows the regulator to fail firms on operational grounds. The changes are part of a broader Fed effort to streamline its stress-testing process, a tool introduced after the 2007-2009 financial crisis that banks say has become far too onerous. The Fed proposed a “stress capital buffer” (SCB) in April, an effort to shift the Fed’s stress testing regime to fall more in line with its traditional supervisory work, and make its requirements more flexible to address each firm’s specific characteristics. But in response to industry comments, Quarles said that the Fed would rethink several portions of the plan to make it simpler for banks.

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