Medium-sized banks may get a temporary reprieve from new “stress test” requirements called for under the 2010 financial regulatory overhaul, the Federal Reserve announced Monday.
The Fed said it is considering delaying, until September 2013, implementation of the stress tests for financial institutions with total consolidated assets between $10 billion and $50 billion.
Currently, banks are set to begin the stress tests upon finalization of a Fed proposal released in December 2010. But federal regulators have struggled to implement the Dodd-Frank law(PL 111-210), with dozens of rules aimed at toughening oversight now delayed.
In Congress, the law is a source of partisan disagreement, with Republicans arguing that it is a drag on the U.S. economy and Democrats charging the GOP wants to gut a law that was enacted after a financial industry meltdown.
Lawmakers required annual stress tests as part of the sprawling rewrite of financial laws in an effort to ensure that banks are healthy enough to withstand future economic downturns or financial crises.
But many banks say they are concerned they won’t be able to execute the tests and urged the central bank to delay its rule, which now seems a likely scenario.
“A number of commenters on the proposal raised concerns about the proposed timing of compliance with the company-run stress test requirements, specifically questioning if all institutions would have the resources, readiness and ability to conduct stress tests given the likely short period between publication of a final rule and the start of the stress testing process,” the Fed said in a written statement.
“The delay under consideration would help ensure that these companies have sufficient time to develop high-quality stress testing programs,” the statement said.
The Fed also said it is consulting with other banking regulators on the possible implementation delay and that the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation are considering similar steps.
From left, Lisa Peng, daughter of Peng Ming, Grace Ge Geng, daughter of Gao Zhisheng, and Ti-Anna Wang, daughter of Wang Bingzhang, hold pictures of their imprisoned fathers during a House Subcommittee on Africa, Global Health, Global Human Rights, and International Organizations hearing in the Rayburn House Office Building titled “Their Daughters Appeal to Beijing: ‘Let Our Fathers Go!’”
Each year since 1990, CQ Roll Call has reviewed the financial disclosures of all 541 senators, representatives and delegates to determine the 50 richest members of Congress. This year's report, derived from forms covering the calendar year 2012, shows it took a net worth of $6.67 million to crack the exclusive club.