The Federal Reserve Board on Tuesday announced that results from the latest supervisory stress tests conducted as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act will be released on Thursday, March 20, and the related results from the Comprehensive Capital Analysis and Review, or CCAR, will be released on Wednesday, March 26. Results will be released for both exercises at 4 p.m. EDT.
The Dodd-Frank Act stress tests are forward-looking exercises conducted by the Federal Reserve and large financial companies supervised by the Federal Reserve. The exercises help assess whether institutions have sufficient capital to absorb losses and support operations during adverse economic and financial market conditions over a period of nine quarters. The Dodd-Frank Act supervisory stress test results will include data such as post-stress capital ratios, revenue, and loss estimates under hypothetical adverse and severely adverse scenarios provided by the Federal Reserve. The capital ratios assume a common set of capital actions for all of the firms. The standardized capital actions used in the Dodd-Frank Act stress test results provide for comparability across the firms as they assume no changes in recent levels of dividend payments and no common stock repurchases.
CCAR is an annual exercise by the Federal Reserve to help assess whether the companies have robust, forward-looking capital planning processes that account for their unique risks and are supported by the firms' risk-measurement and -management practices. As part of the CCAR, the Federal Reserve evaluates each company's plans to make capital distributions, such as dividend payments, stock repurchases, or planned acquisitions. CCAR results will include post-stress capital ratios under hypothetical adverse and severely adverse scenarios provided by the Federal Reserve and will reflect the capital actions the companies plan to undertake during the nine-quarter period. In addition to the quantitative results, the Federal Reserve will indicate whether it has objected to a firm's capital plan based on qualitative grounds.
To see the instructions and scenarios for the 2014 Dodd-Frank Act stress tests and CCAR, go to www.federalreserve.gov/bankinforeg/stress-tests-capital-planning.htm.
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