Fed’s Bowman: New stress test proposals coming soon

(Bloomberg) — The Federal Reserve’s top bank cop said she soon intends to unveil additional changes to stress tests, a move that Wall Street lenders are likely to cheer. 

“We’ve been in the process of introducing incremental proposals to improve the stress testing process and we’ll be in the next week or so introducing another iteration of that,” Fed Vice Chair for Supervision Michelle Bowman said on Tuesday at the Institute of International Finance’s annual gathering in Washington.

The central bank has promised Wall Street lenders the benefit of an early peek into certain stress-test models, as the Fed seeks to even out changes in required capital levels each year. The regular said in April new plans to be unveiled later this year would include disclosing and seeking public comment on the models that determine the hypothetical losses of banks under stress.

The Fed has already unveiled some other plans to overhaul the annual exams, which were implemented in the wake of the 2008 financial crisis and gauge how big banks would handle a hypothetical recession.

Banks have long pushed for changes tied to the capital requirements, arguing they are too burdensome and hinder their ability to function.

Bowman added that a long-awaited new proposal on the US version of the Basel III endgame is currently under negotiation with the Federal Deposit Insurance Corp. and the Office of the Comptroller of the Currency.

Regulators are largely throwing out an earlier version proposed two years ago, and will aim to unveil a new plan as soon as the first quarter of 2026, Bloomberg has previously reported. Bowman also said the Fed is seeking input on how to best implement new rules on stablecoins after Congress passed the Genius Act, which requires stablecoin issuers to formally register and hold dollar-for-dollar reserves.