ARTICLE
13 March 2017

US Federal Bank Regulators Issue Revised Economic Scenarios For 2017 Stress Testing

SS
Shearman & Sterling LLP

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On February 10, 2017, the US Federal Reserve Board, the US Office of the Comptroller of the Currency and the US Federal Deposit Insurance Corporation each released revised economic scenarios for use by certain financial institutions...
United States Finance and Banking

On February 10, 2017, the US Federal Reserve Board, the US Office of the Comptroller of the Currency and the US Federal Deposit Insurance Corporation each released revised economic scenarios for use by certain financial institutions with total consolidated assets of more than $10 billion for the 2017 stress tests as required under the Dodd-Frank Act. The agencies had previously issued scenarios on February 6, 2017 however, these scenarios contained incorrect historical values for the BBB corporate yield in 2016.

The scenarios represent baseline, adverse and severely adverse scenarios and include key variables that reflect economic activity, including unemployment, exchange rates, prices, income, interest rates and other relevant aspects of the economy and financial markets. While the baseline scenario represents expectations of private sector economic forecasters, the adverse and severely adverse scenarios are hypothetical scenarios designed to assess the strength and resilience of financial institutions and their ability to continue to meet the credit needs of households and businesses under stressed economic conditions.

The Federal Reserve Board's revised stress test scenarios are available at: https://www.federalreserve.gov/newsevents/press/bcreg/bcreg20170203a5.pdf , the OCC's stress test scenarios are available at: https://www.occ.gov/tools-forms/forms/bank-operations/stress-test-reporting.html  and the FDIC's revised stress test scenarios are available at: https://www.fdic.gov/news/news/press/2017/pr17012a.xlsx

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