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The Board of Governors of the Federal Reserve System requested comment on its proposal to revise the capital plan and stress test rules for bank holding companies with total consolidated assets of between $50 billion and $250 billion, on-balance sheet foreign exposure of less than $10 billion, and nonbank assets of less than $75 billion. For a bank holding company meeting the asset description ("a large and noncomplex firm"), the proposal would remove the qualitative assessment aspect of the Comprehensive Capital Analysis and Review ("CCAR") test. The proposal was published in the Federal Register.
Under current CCAR requirements, the FRB may object to a capital plan on either quantitative or qualitative grounds. A qualitative objection amounts to a determination that under a proposed capital plan, the firm would not be able to maintain appropriate capital ratios. A qualitative objection is a finding that the firm's capital planning is not sufficiently reliable, and it warrants a more nuanced assessment by the FRB of the firm's capital plan. Under this proposal, the FRB would not make a qualitative assessment in the CCAR review but instead would assess the capital plans of "large and noncomplex firms" outside of the CCAR through the normal supervisory process.
The proposal reflects the FRB's "less stringent expectations for those systemic firms, which are generally engaged in traditional banking activities."
Comments on the proposal must be submitted by November 25, 2016.
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