Comment period on stress-test exemptions proposed by OCC, FDIC to launch Friday

The comment period for a proposal exempting federally supervised banks and savings associations with less than $250 billion in assets from regulators’ company-run stress test requirements begins officially Friday, with the Federal Register publication of the official notice. Comments are due Feb. 19.

The proposed rules, issued by the Federal Deposit Insurance Corp. (FDIC) and Office of the Comptroller of the Currency (OCC), affect national banks, federal savings associations, state nonmember banks, and state savings associations.

Both the FDIC and OCC have stress testing requirements in place under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank), which requires stress testing for institutions with $10 billion or more in assets. The requirements are differentiated in current rules (also under Dodd-Frank) for institutions with $10 billion to $50 billion in assets and those with more than $50 billion, and involve three stress testing scenarios.

But the regulatory relief legislation adopted last spring – the 2018 Economic Growth, Regulatory Relief, and Consumer Protection Act (EGGRCPA, S. 2155) – raises the minimum asset threshold for the company-run stress testing requirement from $10 billion to $250 billion; replaces the requirement for banks to conduct stress tests “annually” with the requirement to conduct stress tests “periodically”; and no longer requires the “adverse” stress testing scenario (and thus reduces the number of required stress testing scenarios to two).

The Register’s publication of the official notice comes in spite of the government shutdown, which began last week and continues today due to a standoff between Congress and President Donald Trump over federal funding.

Ominously, however, the Register includes the following warning at the top of its pages during the shutdown: “If FederalRegister.gov experiences a system outage, we will not be able to restore service until funding is provided.”

Company-Run Stress Testing Requirements for FDIC-Supervised State Nonmember Banks and State Savings Associations