CCAR results highlight Fed’s lack of transparency

Author: John Crabb | Published: 19 Jul 2018

The latest comprehensive capital analysis and review (CCAR) results are a perfect example of why there needs to be more transparency in the Federal Reserve’s (Fed) stress testing scenarios and models.

Its proposed stress capital buffer (SCB) is also a positive step in terms of bringing efficiencies to the capital framework. But more transparency needs to be added to the process so that boards of directors can be the ones making informed decisions about returning capital to shareholders.

Keith Noreika, partner at Simpson Thacher and the acting comptroller of the currency for a spell in 2017, gave testimony on July 17 before the Subcommittee on Financial Institutions and Consumer Credit of the Committee on Financial Services of the US House of Representatives. He focused on the tension between the democratic need for transparency in the creation and implementation of regulatory requirements, and the bases for any requirements, balanced against...