Stress tests

The largest U.S. banks took less of a capital hit under the Federal Reserve's hypothetical stress scenario than they did last year, but averaging the two sets of results could impact next year's regulatory requirements.

Analysts are predicting stronger results this year after a disappointing outcome in 2024.

With the Federal Reserve eyeing changes to its annual examination of large bank resilience, this year's test could be the last of its kind.

The Bank Policy Institute, the American Bankers Association and others said proposed changes would address "some if not all" of banks' concerns about stress tests, but they are filing the lawsuit to preserve their legal right to do so.

The Federal Reserve vice chair for supervision says the failure of Silicon Valley Bank showed the shortcomings of the current stress testing regime.

A significant divergence between the FHFA and the Ginnie Mae issuer rules could greatly disrupt the secondary market — and that is precisely the outcome that now faces the mortgage industry, writes the chairman of Whalen Global Advisors.

On a combined basis, the GSEs performed better under this year's scenario than they did in 2021, but the Federal Housing Finance Agency said changes were still needed.

The proposed best practices would be modeled after federal servicing standards and be used to supervise nonbanks firms subject to state regimes.

Policymakers have eased some rules and the Supreme Court recently dealt a blow to the Consumer Financial Protection Bureau. But as the landmark legislation approaches its 10th anniversary, the post-crisis regulatory regime has stayed largely intact.

Some observers said the central bank should have suspended dividends entirely in response to an unprecedented economic emergency caused by the pandemic. Others said its more cautious moves were appropriate because big banks' capital is strong and the economy could bounce back.