OCC Releases Final Rule Regarding Large Bank Stress Tests

Oct 10 - The Office of the Comptroller of the Currency has announced publication of its final rule regarding company-run stress testing required by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. The rule applies to covered institutions with average total consolidated assets greater than $10 billion.

The final rule implements section 165(i)(2)(A) of the Dodd Frank Act, which requires all financial companies with total consolidated assets of more than $10 billion that are regulated by a primary federal financial regulatory agency to conduct an annual company-run stress test. The final rule requires institutions with average total consolidated assets of $50 billion or greater to begin conducting annual stress tests this year, although the OCC reserves authority to allow covered institutions to delay implementation on a case-by-case basis where warranted. The rule delays implementation for covered institutions with total consolidated assets between $10 billion and $50 billion until October 2013.

For institutions with assets greater than $50 billion that are required to begin stress testing this year, the OCC anticipates releasing stress-testing scenarios in mid-November. Institutions will use their data as of Sept. 30, 2012, to conduct the stress test. Stress test results must be reported to the OCC in early January 2013.

The final rule revises the notice of proposed rulemaking published in the Federal Register on Jan. 24, 2012. The OCC reviewed a wide range of public comments, and coordinated closely with the Federal Reserve Board and the Federal Deposit Insurance Corporation to ensure that rules issued by the OCC, the board and the FDIC are consistent and comparable. The OCC also coordinated with the Federal Insurance Office as required by the Dodd Frank Act.

Click here for the final rule.