Fed's CCAR changes spell supervision shift

Author: Edward Price | Published: 4 Apr 2016

The Federal Reserve is upgrading its 2016 stress test for large financial institutions to include the Basel Committee on Banking Supervision’s principles on risk-data aggregation and reporting. Counsel in the US see the move as a sign that capital requirements are evolving along the lines of an increasingly discretionary and bespoke approach. 

The Federal Reserve’s bank stress test, the Comprehensive Capital Analysis and Review (CCAR), is an annual exercise. A legacy of Dodd-Frank, it’s the Fed’s method for assessing whether the largest US banks have enough capital to operate during imagined economic and financial stress. The Fed also tests the banks for forward-looking capital planning that takes account of their individual risks.

Oliver Ireland,
Morrison & Foerster
The Basel Committee’s principles on risk-data aggregation and reporting, known as BCBS 239, require banks to report aggregate risk data to regulators and senior management promptly. The principles...