02.02.2012 Office of the Comptroller of the Currency Issues Proposed Rules for Annual Stress Tests, as Required under Dodd-Frank
BY: EDMUND D. HARLLEE
On Tuesday, January 24, 2012, the Office of the Comptroller of the Currency (the “OCC”) issued proposed rules to implement the requirements of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Act”) described below. Comments must be received by March 26, 2012.
Section 165(i)(2) of the Act requires national banks and federal savings associations having total consolidated assets of more than $10 billion to conduct annual internal stress tests and to report the results to the OCC and the Federal Reserve Board. A summary of the results of such testing is also required to be published. A “stress test” is a process used to assess the potential impact on the bank of various economic and financial conditions, with a view to the impact on the bank’s consolidated earnings, losses and capital over a certain period of time.
This proposed rule sets forth methodologies and practices to be used in conducting the stress tests. The OCC is to provide a set of economic and financial conditions (called “scenarios”) to covered banks no later than mid-October of each year. The results of stress tests are to be received by the OCC no later than January 5 of the following year, with the results to be made public by early April.
Covered banks and other interested persons may comment, and should do so if they think that these rules, or the specifics of the implementation of these rules as published in the notice, will have an adverse effect on their businesses. According to the notice of proposed rulemaking, there are various methods for the submission of comments. Those commenting should review page 3408 of the Federal Register dated January 24, 2012 (Volume 77, Number 15) for instructions.
If you have any questions about the information in this Alert, please contact Ed Harllee at firstname.lastname@example.org.