Coalition of major banks sue the Federal Reserve over stress test

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Posted on 12/24/2024 5:40:49 PM PST by bitt

The groups that brought the lawsuit, which includes the Bank Policy Institute (BPI), said they do not oppose stress tests, but said the current framework “produces vacillating and unexplained requirements and restrictions on bank capital."

Agroup of banks and business organizations on Tuesday sued the Federal Reserve over the framework of its annual bank stress tests.

The lawsuit, filed in an Ohio court, comes one day after the Fed said it plans to make "significant changes" to the stress tests that provide more transparency, citing an "evolving legal landscape," as demonstrated by recent changes in administrative laws.

The stress tests look at how prepared major U.S. banks are for various economic crises. The most recent looked at how prepared they were for a 40% drop in commercial real estate prices and 36% drop in housing prices, according to the Financial Times.

The reserve on Monday did not indicate any specific changes it would make to the tests, but said it would open the process to public comment soon.

The groups that brought the lawsuit, which includes the Bank Policy Institute (BPI), said they do not oppose stress tests but argued the current framework “produces vacillating and unexplained requirements and restrictions on bank capital," according to CNBC.

The groups also accused the Fed in July of being in violation of the Administrative Procedure Act because it did not seek public comment on its stress tests scenarios and was not transparent in its process and the models it used to project bank losses.

(Excerpt) Read more at justthenews.com ...

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1 posted on 12/24/2024 5:40:49 PM PST by bitt

To: null and void; aragorn; EnigmaticAnomaly; kalee; Kale; AZ .44 MAG; Baynative; bgill; bitt; ...

2 posted on 12/24/2024 5:41:03 PM PST by bitt (<img src=' 'width=30%>)

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