Fed to seek input on stress tests
Federal Reserve officials are asking the business community for advice on how to test financial institutions’ preparedness for economic calamity.
Fed vice chairman Stanley Fischer said Wednesday that the central bank is considering changes to how it monitors financial institutions, a process known as “stress tests” within the industry.
“As part of that assessment process, we are also currently seeking feedback from the industry, market analysts and academics about the program,” Fischer said during a speech an economic forum in Sweeden.
{mosads}His comments come as the U.S. nears the fifth anniversary of the 2010 Dodd-Frank Wall Street Reform law, where the idea of stress-testing financial institutions became law.
But it’s received pushback amongst the industry. Stress tests require financial institutions to submit plans to regulators that are largely hypothetical.
Some in the business community have argued the tests have created too much regulatory red tape. Meanwhile, progressives have argued regulators haven’t been tough enough on financial institutions that fail the stress tests.
Fischer indicated Fed officials are willing to make changes to their policy.
“With the benefit of five years of experience, the Fed is continuing to assess its stress-testing program, and to make appropriate changes,” Fischer said.
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