March 24, 2014

Federal Regulators Issue Joint Guidance on Company-Run Stress Tests for Mid-sized Banks

Arnold & Porter Advisory

On March 20, 2014, the Board of Governors of the Federal Reserve System announced the results of the annual company-run stress tests for the 30 largest banking institutions, concluding that the institutions have improved their capital positions and are now better positioned to endure conditions of extremely severe stress than they were five years ago. For Mid-sized Banks, this announcement offers a glimpse into the implementation of the stress-test public disclosure requirements, which such institutions are required to meet in 2015.

This Advisory summarizes the long-awaited final supervisory guidance on Mid-size Bank company-run stress tests (the Guidance), which was recently issued by the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency (collectively the Federal Regulators). The Guidance sets general supervisory expectations for how to conduct company-run stress tests, and provides examples of practices that supervisors would consider consistent with those expectations.

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