Fed proposes changes to make U.S. bank stress tests more transparent

WASHINGTON (Reuters) – The Federal Reserve, the top U.S. banking regulator, on Thursday proposed changes to its annual bank “stress testing” process, aiming to give lenders significantly more information about how their portfolios may perform during potential market shocks.

The proposed tweaks mark a major win for big banks which have for years complained that the Fed’s stress testing process is too opaque, leaving them in the dark over whether they will pass or fail.

Under the proposed changes, the Fed would allow banks for the first time to see how hypothetical loan portfolios would perform under the testing model. The Fed would also provide more information about the scenarios it builds each year to put bank balance sheets under stress.

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