House Financial Services Committee To Meet Shortly On Fed Stress Testing

The Republican-controlled House Financial Services Committee subcommittee on Financial Institutions and Monetary Policy is due to meet shortly to consider the bill, H.R.8591 – “To amend the Federal Reserve Act to add requirements to the annual report of the Board of Governors of the Federal Reserve System, and for other purposes.” LIVESTREAM

• The committee will hear testimony from Sean Campbell, Chief Economist at Financial Services Forum, Francisco Covas, Executive Vice President at the Bank Policy Institute, Jonathan Gould at Jones Day and Greg Feldberg, Research Director at the Yale School of Management.
• The hearing memorandumnotes: “…the Dodd Frank Act requires the Federal Reserve to conduct stress tests of certain bank holding companies to determine whether they have “the capital, on a total consolidated basis, necessary to absorb losses as a result of adverse economic conditions.”
• “The hearing will examine stress testing and scenario analysis, including whether the Federal Reserve should decouple stress tests from capital requirements.”
• The hearing comes shortly before the Federal Reserve announces results from its annual bank stress tests at 16:30 ET 21:30 BST.
• The Fed notes: “This year, 32 banks with $100 billion or more in total assets are subject to the Board's stress tests. The scenario includes a severe global recession with heightened stress in commercial and residential real estate markets. Separately, the exploratory analysis includes four separate hypothetical elements, including two funding stresses applied to all banks tested and two market shocks applied to only the largest and most complex banks.”