Enhanced Transparency and Public Accountability of the Supervisory Stress Test Models and Scenarios; Modifications to the Capital Planning and Stress Capital Buffer Requirement Rule, Enhanced Prudential Standards Rule, and Regulation LL
Key claim: The Federal Reserve is making its annual large-bank stress-test models and scenarios more public and updating the rules that set those banks’ required capital buffers, while locking in 2027 test models and seeking comment on further model changes.
Abstract
(Rule · Federal Reserve System) The Board of Governors of the Federal Reserve System (Board) has adopted final amendments to Regulations Y, LL, and YY to enhance the transparency and public accountability of the Board’s stress testing framework. The Board is also finalizing amendments to the Policy Statement on the Scenario Design Framework for Stress Testing and the Stress Testing Policy Statement. The Board is also announcing that it is finalizing models for the 2027 stress test and proposing for public input additional changes to the stress test models for the 2027 stress test. Finally, the Board is finalizing changes to the stress test data collection (FR Y-14A/Q/M).
Why this matters
Supervisory stress tests set the stress capital buffer that drives large-bank capital requirements, dividends, and buybacks, so opening the models and scenarios to public scrutiny changes how banks and outside analysts can anticipate and challenge those capital demands. Locking in the 2027 models while soliciting comment on further changes signals a shift toward a more rules-like, participatory process for a regime that has historically been largely opaque.