Federal Reserve Board Considering Changes to the Implementation Timeline for the Dodd-Frank Company-Run Stress Test Requirements
The Federal Reserve Board is considering changes to the implementation timeline for the annual company-run stress test requirements required by the Dodd-Frank Wall Street Reform and Consumer Protection Act. The changes under consideration would delay implementation until September 2013 for bank holding companies, state member banks, and savings and loan holding companies with between $10 billion and $50 billion in total consolidated assets.
The Federal Reserve in December 2011 issued a notice of proposed rulemaking to implement the enhanced prudential standards and early remediation requirements established under the Dodd-Frank Act. The December 2011 proposal would require all bank holding companies and state member banks with more than $10 billion in total consolidated assets to comply with the requirements to conduct an annual company-run stress test beginning on the effective date of the final rule. The December 2011 proposal would also require all savings and loan holding companies with more than $10 billion in assets to comply with the annual company-run stress test requirements once those holding companies become subject to minimum risk-based capital requirements.
A number of commenters on the proposal raised concerns about the proposed timing of compliance with the company-run stress test requirements, specifically questioning if all institutions would have the resources, readiness, and ability to conduct stress tests given the likely short period between publication of a final rule and the start of the stress testing process. A key priority in implementing the stress testing requirements of the Dodd-Frank Act is to ensure that companies have robust systems and processes to conduct the stress tests. In response to the concerns expressed in comments, the Board is considering delaying the effective date of the rule to conduct the annual stress tests for bank holding companies, state member banks, and savings and loan holding companies with between $10 billion and $50 billion in total consolidated assets. The delay under consideration would help ensure that these companies have sufficient time to develop high-quality stress testing programs.
As part of efforts among the federal banking agencies to coordinate the implementation of Dodd-Frank stress testing requirements, the Federal Reserve has consulted on this proposed implementation delay with the Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corporation (FDIC). The OCC and FDIC are considering similar changes to timelines included in their proposed rules implementing Dodd-Frank stress test requirements.
Additional details about the timing and scope of Dodd-Frank stress test requirements for bank holding companies, state member banks, and savings and loan holding companies with between $10 billion and $50 billion in total consolidated assets will be included in a forthcoming final rule.
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