The Officer of the Comptroller of the Currency (OCC) has released economic and financial market scenarios for use in the upcoming Dodd-Frank stress test.
“Section 165(i)(2) of the Dodd-Frank Act, as amended by the Economic Growth, Regulatory Relief, and Consumer Protection Act, requires certain financial companies, including certain national banks and federal savings associations, to conduct periodic stress tests,” the agency stated in a release.
The tests are company-run, and results provide the OCC with forward-looking information used in bank supervision and assist the agency in assessing the company’s risk profile and capital adequacy. The stress tests include economic scenarios that cover both baseline and severely adverse scenarios, and include considerations such as macroeconomic activity, unemployment, exchange rates, prices, income, and interest rates.
Covered institutions are required to submit results by April 5 and publish them between June 15 and July 15. Category III banks are not required to submit stress testing data to the OCC for the 2021 reporting year. They will be required to submit again for 2022.
“The OCC intends to use the data to assess the reasonableness of the stress test results and determine whether additional analytical techniques are needed to identify, measure, and monitor risk,” the agency stated. “These stress test results are also expected to support ongoing improvement in a covered institution’s stress testing practices with respect to its internal assessments of capital adequacy and overall capital planning.”