On September 30, the Federal Reserve invited public comment on a proposal that would update its capital planning and stress testing requirements to be consistent with other Federal Reserve rules that were recently modified. In 2019, the Federal Reserve finalized a framework that sorts large banks into different categories based on their risks, with rules that are tailored to the risks of each category. The proposal updates the Federal Reserve’s capital planning requirements — which help ensure that firms plan for and determine their capital needs under a range of different scenarios — to reflect that new framework. In particular, firms in the lowest risk category are on a two-year stress test cycle and not subject to company-run stress test requirements and the proposal reflects those changes. The proposal also seeks comment on the Federal Reserve’s existing capital planning guidance applicable to all firms. The proposal would not change firms’ capital requirements. Comments will be accepted until November 20, 2020.
