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Impact of Proposed “Regulatory Off-Ramp” for Community Banks

February 15, 2017

Authors

Robert Klingler

Impact of Proposed “Regulatory Off-Ramp” for Community Banks

February 15, 2017

by: Robert Klingler

A key component of the proposed roadmap for Republican efforts to provide regulatory relief is based on reduced regulatory burdens in exchange for holding higher capital levels.  Specifically, Title I of the proposed Financial Choice Act, as modified by Representative Hensarling’s “Choice Act 2.0 Changes” memo of February 7, 2017, proposes to provide significant regulatory relief for institutions that maintain an average leverage ratio of at least 10 percent.

The principal concepts of this “regulatory off-ramp” have, so far, remained relatively

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OCC Releases Stress Testing Guidance for Community Banks

October 22, 2012

Authors

Jonathan Hightower

OCC Releases Stress Testing Guidance for Community Banks

October 22, 2012

by: Jonathan Hightower

On October 18, 2012, the OCC released stress testing guidance  for national banks and federal savings associations with $10 billion or less in total assets.  While the regulatory authorities clarified in May of this year that the Supervisory Guidance on Stress Testing for Banking Organizations with More than $10 Billion in Total Consolidated Assets would not apply to community banks, the OCC has now confirmed that the stress testing requirements in Dodd-Frank have “trickled down” to community banks, at least to those regulated by the OCC. The guidance states that appropriate stress testing should be performed

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Regulators’ “No Stress” Message to Smaller Banks Only Tells Part of the Story

May 14, 2012

Authors

Jonathan Hightower

Regulators’ “No Stress” Message to Smaller Banks Only Tells Part of the Story

May 14, 2012

by: Jonathan Hightower

On May 14, 2012, the Federal Reserve, FDIC and the OCC released a joint statement confirming that that banking organizations with total consolidated assets of $10 billion and under will not be required to conduct formal stress tests.  Management of many smaller banking organizations had been concerned that the stress testing required of larger banks would “trickle down” in an informal sense to smaller banks.  With this regulatory statement, that concern is alleviated, at least in the official sense.

We continue to believe that the heightened (or perhaps renewed) emphasis on risk management by the regulators will affect banks

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Financial Services Update

November 22, 2010

Authors

Matt Jessee

Financial Services Update

November 22, 2010

by: Matt Jessee

Debate Over Extension of Bush Tax Cuts Continues

On Thursday, House Majority Leader Steny Hoyer (D-MD) and House Speaker Nancy Pelosi (D-CA) told House Democrats at a closed door meeting that the House would vote before the end of the year on extending the Bush tax cuts for only those individuals making less than $250,000. However, even if such a measure were to pass in the House, it is unclear whether the Senate will agree to such a vote. There is still the possibility the bill may not pass the House if Republicans are able to successfully pass a procedural

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TARP Capital Redemption Standards

June 2, 2009

Authors

Robert Klingler

TARP Capital Redemption Standards

June 2, 2009

by: Robert Klingler

On June 1, 2009, the Federal Reserve announced the standards that the Federal Reserve would apply in determining whether the nineteen largest bank holding companies (the “Stress Test” participants) would be permitted to redeem their outstanding TARP Capital Purchase Program securities.

Under the TARP Capital Purchase Program, an institution may seek to redeem the TARP investment at any time, subject to the approval of the institution’s primary federal regulator.  While institutions were initially limited in their ability to redeem the TARP investment during its first three years, Congress removed that limitation under the American Recovery and Reinvestment Act of

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Stress Test Results and Loss Projections

May 7, 2009

Authors

Robert Klingler

Stress Test Results and Loss Projections

May 7, 2009

by: Robert Klingler

On May 7, 2009, the Federal Reserve released its Overview of Results of the Supervisory Capital Assessment Program (or Stress Test).  The headlines regarding the Stress Test Results are likely to emphasize that ten of the 19 participating institutions are required to collectively raise $74.6 billion in new common equity, as follows:

  • American Express – $0
  • Bank of America – $33.9 billion
  • BB&T – $0
  • Bank of New York Mellon – $0
  • Capital One – $0
  • Citigroup – $5.5 billion
  • Fifth Third – $1.1 billion
  • GMAC – $11.5 billion (of which $9.1 billion must be new Tier 1
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Stress Test Statement

May 6, 2009

Authors

Robert Klingler

Stress Test Statement

May 6, 2009

by: Robert Klingler

In advance of releasing the “Stress Test” results (scheduled for 5:00pm on Thursday, May 7, 2009), the Treasury and the federal banking regulators released a joint statement about the Supervisory Capital Assistance Program on May 6, 2009.  The joint statement also includes information about the process that will be used for institutions desiring to redeem their TARP Capital Purchase Program Preferred stock.

A few key points about the Stress Test:

  • The government intends to announce, for each of the 19 institutions individually and in the aggregate, estimates of: losses and loss rates across select categories of loans; resources
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The Stress Test Facts

April 24, 2009

Authors

Robert Klingler

The Stress Test Facts

April 24, 2009

by: Robert Klingler

On April 24, 2009, the Federal Reserve published a white paper describing the process and methodologies employed by the federal banking supervisory agencies in their forward-looking capital assessment of large U.S. bank holding companies.  The white paper is thin on new details, but does provide a base for understanding the stress tests being undertaken of 19 bank holding companies with total assets in excess of $100 billion.

Purpose and Effect of the Stress Tests

The stress tests are designed as the first part of the Capital Assistance Program to demonstrate which institutions the government believes will need to raise

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