OCC Adjusts Stress Test Requirements
Earlier this month, the Office of the Comptroller of the Currency (OCC) published a final rule adjusting its policies regarding the annual stress tests required by Section 165 (i) (2) by the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act). The legislation requires the OCC, Federal Reserve and Federal Deposit Insurance Corporation (FDIC) to assess the financial readiness of financial institutions with more than $10 billion.
The OCC’s amendments were originally proposed in July of this year. The final rule adjusts the timing of the annual stress test cycles by three months. The final rules also clarifies how the agency calculates regulatory capital in the stress tests, so that covered institutions will not have to calculate their risk-weighted assets using the internal ratings-based and advanced measurement approaches until the stress testing cycle beginning on January 1, 2016.