U.S. banking regulators are thinking of pushing back stress test requirements for smaller banks to give them more time to prepare.
The U.S. Federal Reserve Board said on Monday that it is considering changes to the implementation timeline for the annual stress test requirements that are being imposed by the U.S. regulatory reform bill known as Dodd-Frank. As part of those reforms, the Fed will require all bank holding companies and state banks with more than $10 billion in total consolidated assets to conduct an annual company-run stress test.
It has yet to set an implementation date for those requirements, but said Monday that a number of commenters on its proposals have raised concerns, specifically questioning whether all the institutions would be ready and able to conduct stress tests when the rule does take effect.
So, in response to those concerns, the Fed is now considering delaying the effective date of the rule until September 2013 for bank holding companies, state member banks, and savings and loan holding companies with between $10 billion and $50 billion in total consolidated assets.
“The delay under consideration would help ensure that these companies have sufficient time to develop high-quality stress testing programs,” it says, adding, “A key priority in implementing the stress testing requirements of the Dodd-Frank Act is to ensure that companies have robust systems and processes to conduct the stress tests.”
The Fed says that it has consulted on this proposed implementation delay with other U.S. banking regulators, including the Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corporation (FDIC), and that they are considering similar changes to their stress testing deadlines too.
Details about the timing and scope of the stress test requirements will be included in a final rule, it says.