The Federal Reserve runs annual "stress tests" on big banks to see if they can survive an economic downturn — but the formulas and assumptions behind those tests have largely been a black box. This bill would force the Fed to publicly disclose the models it uses and lock in the methodology through formal rulemaking, so banks and the public can see exactly how decisions are made. It also requires scenarios to be published at least 60 days before each test, prohibits the Fed from running climate-related stress tests, and calls for a GAO review of the program every three years.
Transparency & Accountability
- Public disclosure of stress-test methodology — Fed required to set models and assumptions through notice-and-comment rulemaking
- Pre-test scenario publication — Fed must release scenarios at least 60 days before each stress test
- GAO oversight — Three-year recurring study of stress-test effectiveness required
Corporate Benefits
- Fed discretion over stress-test design — Material methodology changes require formal rulemaking
- Climate-risk stress testing of banks and nonbank financial firms — Prohibited under section 165(i) authority
Environmental Concerns
- Climate-risk financial stress testing — Prohibited for nonbank and bank holding companies
Congressional Summary
This bill requires the Federal Reserve Board to make public certain details concerning annual stress tests performed by the board and prohibits certain stress test practices. (Stress tests assess a financial institution’s response to a hypothetical disruptive economic event. The board sets an institution’s capital requirements or stress capital buffer based on the results.) Specifically, the bill requires the board to issue a rule that establishes the models, assumptions, and methods used by the board to perform annual stress tests on certain nonbank financial companies and large bank holding companies. The board must also issue a rule determining the stress capital buffer requirement for certain companies that have at least two results from periodic stress tests. In addition, the board must disclose annually each scenario to be used in stress testing.Further, the board is prohibited from materially changing stress test methodologies outside of the rulemaking process. The board must also ensure that stress capital buffer requirements and risk-based capital requirements do not contain capital requirements for the same risks. The board is also prohibited from performing climate-related stress tests. The Government Accountability Office must report on the effectiveness of the stress tests every three years.
Details
- Congress
- 119th
- Chamber
- Status
- summarized
- Action
- Action Date
- Date Added
- 2026-04-02
- Source
- Congress.gov →
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