Comptroller Curry's Statement Regarding FDIC Stress Test Rule

WASHINGTON — Comptroller of the Currency Thomas J. Curry made the following statement on the stress test rule at a meeting today of the Board of Directors of the Federal Deposit Insurance Corporation:

I have approved a similar final rule for national banks and federal thrifts. I would like to commend FDIC staff on their work to finalize this rule. I know it wasn’t easy to get it done, but the results are good.

Stress tests under this rule will be a useful addition to the supervisory tool kit; we as regulators need confidence that supervised institutions not only will survive stressful conditions, but will remain strong enough to continue fulfilling their central role in our economic and financial system.

I know that the FDIC staff worked closely with OCC and Federal Reserve staff as the other agencies developed similar rules, and I want to thank them for that collaboration. The Dodd-Frank Act directed the agencies to develop stress test rules that are “consistent and comparable,” but beyond that requirement, it is simply good government for the agencies to coordinate on rules like this.

It will be important for the agencies to continue to work closely together on some of the remaining elements, like finishing the reporting templates, developing the stress scenarios under this rule each year, and providing guidance to banks and savings associations on stress test methodologies consistent with this rule.

Also, going forward the agencies will need to coordinate supervisory approaches to companies affected by the rule, particularly when banks or thrifts with different primary supervisors are part of the same holding company.

For this rule, as with all regulations, I think it is important that we as regulators pay attention to getting the right balance, so that we get the benefits without unnecessary and costly burden.

In that regard, I am pleased that the FDIC along with the other federal banking agencies responsible for their companion rules were responsive to comments on the earlier notice of proposed rulemaking. Comments, particularly from smaller institutions, pointed out that initial compliance with this rule may be challenging. Many of the changes to the final rule were designed to address those concerns.

For example, I believe the implementation timeline in the final rule strikes the right balance: institutions with $50 billion in assets or more will implement first, which is appropriate since those larger companies generally are more experienced with this kind of stress testing and may pose greater risks to the system. Implementation for smaller institutions is delayed a full year.

Also, smaller institutions (those with less than $50 billion in assets) will have additional time to complete the stress tests each year,¹ which will make the results more reliable by giving them the time to do it right.

I support this rule, and believe it will support a stronger banking system.