Financial Services Forum Statement on Stress Test Scenarios

5 Feb 2019

FOR IMMEDIATE RELEASE

CONTACT: Julia Lawless, (202) 457-8766

 

WASHINGTON, D.C. – Financial Services Forum President and CEO Kevin Fromer issued the following statement today after the Federal Reserve Board released the scenarios large financial institutions will use for the 2019 Comprehensive Capital Analysis and Review (CCAR) and Dodd-Frank Act stress test exercises:

“Once again, the health and viability of the nation’s largest banks will be measured using a severe economic scenario intended to be consistent with a deep, post-war recession.  We look forward to reviewing the scenario to understand how it achieves this standard.  The Fed has rightly recognized the strength and resilience of large financial institutions, whose strong capital and liquidity positions have prepared them to promote growth and opportunity even during times of severe financial and economic distress. The Forum supports federal regulators’ commitment to modernize the current stress test regime and will work to maintain a safe and sound financial system that can be further improved in part through greater transparency.”

Background:

Each year, the Federal Reserve releases CCAR scenarios to evaluate the resilience of individual financial institutions and measure how a firm would fare in a severe economic downturn. A financial institution must demonstrate it has adequate capital to absorb losses.

Vice Chairman for Supervision Randy Quarles, in November, outlined ways the Federal Reserve could “increase both the transparency and the efficiency of the stress testing regime.”

In December, the Federal Reserve issued its inaugural Financial Stability Report, which provides an overview of the health of the U.S. financial system. Specifically, the report noted, “The banking sector is resilient…as evidenced by high levels of capital and liquidity.”

Forum member institutions, alone, have increased their capital by 40 percent from nine years ago to $900 billion; more than doubled their liquid assets since 2010; and simplified their corporate structures.

To learn more about how large U.S. financial institutions are safe and sound and supporting the economy click here.

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The Financial Services Forum is an economic policy and advocacy organization whose members are the chief executive officers of the eight largest and most diversified financial institutions headquartered in the United States.  Forum member institutions are a leading source of lending and investment in the United States and serve millions of consumers, businesses, investors, and communities throughout the country. The Forum promotes policies that support savings and investment, deep and liquid capital markets, a competitive global marketplace, and a sound financial system.
Visit our website: fsforum.com

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Learn More:

BankNotes Blog: Ten Years Later: Taking Stock of the Progress Made After the Financial Crisis and Look to the Future

The financial system has undergone significant and important changes during the past decade that have dramatically improved the safety, soundness, and resiliency of the banking sector. Read the blog.