The Federal Reserve is seeking public feedback concerning proposals intended to enhance the transparency and public accountability of its annual bank stress test.
Specifically, the agency has requested comments regarding the stress test models, proposed changes to the framework used to design hypothetical scenarios and the hypothetical scenarios for the upcoming 2026 stress test.
The public is also being asked to comment on proposed enhancements to the disclosure process for future stress test cycles, adjustments to the annual timeline to accommodate a comment period for scenarios and enhancements to reporting forms intended to reduce burden and improve risk capture.
“In an effort to avoid litigation, the board committed to make significant improvements in the transparency of the stress tests,” Fed Vice Chair for Supervision Michelle Bowman said in a press release. “These proposals take a necessary step toward fulfilling that commitment and would promote due process. Regulated firms should be subject to clearly articulated and transparent rules. Capital requirements should not be set in a way that is shielded from meaningful public scrutiny.”
The Fed conducts stress tests to ensure that large banks are sufficiently capitalized and able to lend to households and businesses, even in a severe recession. In December 2024, the Fed announced it would modify the test in important respects to improve its resilience.
Annual stress test outcomes vary from year to year, sometimes significantly, resulting in volatility in capital requirements from year to year based on differences in hypothetical scenarios.
The Fed has estimated that the proposed stress test model and scenario changes would not materially change capital requirements for firms subject to the supervisory stress test, across various stress scenarios and starting test conditions.
Comments on the 2026 scenarios are due by Dec. 1. Comments on the proposed enhancements to the stress test model and for scenario transparency are due by Jan. 22, 2026.