FDIC jumps on stress-test bandwagon, releasing scenarios for banks with $250 billion or more in assets

Hypothetical economic scenarios for use by banks with more than $250 billion in assets to be used in stress tests were released Tuesday by the federal insurer of bank deposits.

In releasing the scenarios, the Federal Deposit Insurance Corp. (FDIC) joined with the Federal Reserve and the Office of the Comptroller of the Currency (OCC) in preparing for 2022 stress testing of banks. The other two banking agencies released their components last week.

The FDIC said the scenarios include baseline and severely adverse scenarios. The baseline scenario is in line with a survey of private sector economic forecasters, the agency said. The severely adverse scenario is not a forecast, the FDIC said. The agency described it as a hypothetical scenario designed to assess the strength and resilience of financial institutions. Each scenario includes 28 variables—such as gross domestic product, the unemployment rate, stock market price — covering domestic and international economic activity, the FDIC said.

“Rules state that the FDIC will provide scenarios to covered institutions by Feb. 15 of each reporting year,” the agency said in a release, noting it had coordinated with both the Fed and the OCC in developing and distributing the scenarios.

FDIC Releases Economic Scenarios for 2022 Stress Testing