This section of the FEDERAL REGISTER
contains notices to the public of the proposed
issuance of rules and regulations. The
purpose of these notices is to give interested
persons an opportunity to participate in the
rule making prior to the adoption of the final
rules.
Proposed Rules Federal Register
67149
Vol. 83, No. 248
Friday, December 28, 2018
1 12 U.S.C. 5365(i).
2 77 FR 62417 (October 15, 2012). The Board and
the Office of the Comptroller of the Currency
contemporaneously issued comparable regulations.
See 77 FR 62380 (October 12, 2012) (Board); 77 FR
61238 (October 9, 2012) (OCC).
3 Public Law 115–174, 132 Stat. 1296–1368
(2018).
FEDERAL DEPOSIT INSURANCE
CORPORATION
12 CFR Part 325
RIN 3064–AE84
Company-Run Stress Testing
Requirements for FDIC-Supervised
State Nonmember Banks and State
Savings Associations
AGENCY: Federal Deposit Insurance
Corporation.
ACTION: Notice of proposed rulemaking
with request for public comment.
SUMMARY: The Federal Deposit
Insurance Corporation (FDIC) is
requesting comment on a proposed rule
(proposed rule or NPR) that would
revise the FDIC’s requirements for stress
testing by FDIC-supervised institutions,
consistent with changes made by
Section 401 of the Economic Growth,
Regulatory Relief, and Consumer
Protection Act (EGRRCPA). Specifically,
the proposed rule would amend the
FDIC’s existing stress testing regulations
to change the minimum threshold for
applicability from $10 billion to $250
billion, revise the frequency of required
stress tests by FDIC-supervised
institutions, and reduce the number of
required stress testing scenarios from
three to two. The NPR also proposes to
make certain conforming and technical
changes, including changes that were
previously proposed in an April 2018
notice of proposed rulemaking that was
superseded, in part, by the enactment of
EGRRCPA.
DATES: Comments on the notice of
proposed rulemaking must be received
by February 19, 2019.
ADDRESSES: Interested parties are
encouraged to submit written
comments. Commenters are encouraged
to use the title ‘‘Company-Run Stress
Testing Requirements for FDIC-
supervised State Nonmember Banks and
State Savings Associations’’ to facilitate
the organization and distribution of
comments among the Agencies. You
may submit comments, identified by
RIN number, by any of the following
methods:
• Agency website: https://
www.FDIC.gov/regulations/laws/
federal/. Follow instructions for
submitting comments on the Agency
website.
• Email: Comments@FDIC.gov.
Include RIN 3064–AE84 on the subject
line of the message.
• Mail: Robert E. Feldman, Executive
Secretary, Attention: Comments, Federal
Deposit Insurance Corporation, 550 17th
Street NW, Washington, DC 20429.
• Hand Delivered/Courier: Comments
may be hand-delivered to the guard
station at the rear of the 550 17th Street
Building (located on F Street) on
business days between 7:00 a.m. and
5:00 p.m.
• Public Inspection: All comments
received must include the agency name
and RIN 3064–AE84 for this rulemaking.
All comments received will be posted
without change to https://www.fdic.gov/
regulations/laws/federal/, including any
personal information provided. Paper
copies of public comments may be
ordered from the FDIC Public
Information Center, 3501 North Fairfax
Drive, Room E–1002, Arlington, VA
22226 by telephone at 1 (877) 275–3342
or 1 (703) 562–2200.
FOR FURTHER INFORMATION CONTACT:
Ryan Sheller, Section Chief, (202) 412–
4861, RSheller@FDIC.gov, Large Bank
Supervision, Division of Risk
Management Supervision; Annmarie
Boyd, Counsel, (202) 898–3714, aboyd@
FDIC.gov; or Benjamin Klein, Counsel,
(202) 898–7027, bklein@FDIC.gov; Legal
Division, Federal Deposit Insurance
Corporation, 550 17th Street NW,
Washington, DC, 20429.
SUPPLEMENTARY INFORMATION:
I. Background
Prior to the enactment of EGRRCPA,
section 165(i)(2) of the Dodd-Frank Wall
Street Reform and Consumer Protection
Act 1 (Dodd-Frank Act) required a
financial company, including an
insured depository institution, with
total consolidated assets of more than
$10 billion and regulated by a primary
Federal regulatory agency to conduct
annual stress tests and submit a report
to the Board of Governors of the Federal
Reserve System (Board) and to its
primary federal regulatory agency.
Section 165(i)(2)(C) required each
primary Federal regulator to issue
consistent and comparable regulations
to: (1) Implement the stress testing
requirements, including establishing
methodologies for conducting stress
tests that provided for at least three
different sets of conditions, including
baseline, adverse, and severely adverse;
(2) establish the form and content of the
required reports, and (3) require
companies to publish a summary of the
stress test results.
In October 2012, the FDIC published
in the Federal Register its rule
implementing the Dodd-Frank Act stress
testing requirement.2 The FDIC
regulation at 12 CFR part 325
implements the company-run stress test
requirements of section 165(i)(2) of the
Dodd-Frank Act with respect to state
nonmember banks and state savings
associations with more than $10 billion
in assets (covered banks). Although 12
CFR part 325 applies to all covered
banks that exceed $10 billion in assets,
the regulation differentiates between
‘‘$10 billion to $50 billion covered
banks’’ and ‘‘over $50 billion covered
banks.’’
EGRRCPA, enacted on May 24, 2018,3
amended certain aspects of the
company-run stress-testing
requirements in section 165(i)(2) of the
Dodd-Frank Act. Specifically, section
401 of EGRRCPA raises the minimum
asset threshold for the company-run
stress testing requirement from $10
billion to $250 billion; replaces the
requirement for banks to conduct stress
tests ‘‘annually’’ with the requirement to
conduct stress tests ‘‘periodically;’’ and
no longer requires the ‘‘adverse’’ stress
testing scenario, thus reducing the
number of required stress testing
scenarios from three to two. The
EGRRCPA amendments to the section
165(i)(2) stress testing requirements are
effective eighteen months after
enactment.
Prior to the enactment of EGRRCPA,
on April 2, 2018, the FDIC issued a
notice of proposed rulemaking that also
proposed certain revisions to the FDIC
VerDate Sep<11>2014 16:22 Dec 27, 2018 Jkt 247001 PO 00000 Frm 00001 Fmt 4702 Sfmt 4702 E:\FR\FM\28DEP1.SGM 28DEP1
amozie on DSK3GDR082PROD with PROPOSALS1
contains notices to the public of the proposed
issuance of rules and regulations. The
purpose of these notices is to give interested
persons an opportunity to participate in the
rule making prior to the adoption of the final
rules.
Proposed Rules Federal Register
67149
Vol. 83, No. 248
Friday, December 28, 2018
1 12 U.S.C. 5365(i).
2 77 FR 62417 (October 15, 2012). The Board and
the Office of the Comptroller of the Currency
contemporaneously issued comparable regulations.
See 77 FR 62380 (October 12, 2012) (Board); 77 FR
61238 (October 9, 2012) (OCC).
3 Public Law 115–174, 132 Stat. 1296–1368
(2018).
FEDERAL DEPOSIT INSURANCE
CORPORATION
12 CFR Part 325
RIN 3064–AE84
Company-Run Stress Testing
Requirements for FDIC-Supervised
State Nonmember Banks and State
Savings Associations
AGENCY: Federal Deposit Insurance
Corporation.
ACTION: Notice of proposed rulemaking
with request for public comment.
SUMMARY: The Federal Deposit
Insurance Corporation (FDIC) is
requesting comment on a proposed rule
(proposed rule or NPR) that would
revise the FDIC’s requirements for stress
testing by FDIC-supervised institutions,
consistent with changes made by
Section 401 of the Economic Growth,
Regulatory Relief, and Consumer
Protection Act (EGRRCPA). Specifically,
the proposed rule would amend the
FDIC’s existing stress testing regulations
to change the minimum threshold for
applicability from $10 billion to $250
billion, revise the frequency of required
stress tests by FDIC-supervised
institutions, and reduce the number of
required stress testing scenarios from
three to two. The NPR also proposes to
make certain conforming and technical
changes, including changes that were
previously proposed in an April 2018
notice of proposed rulemaking that was
superseded, in part, by the enactment of
EGRRCPA.
DATES: Comments on the notice of
proposed rulemaking must be received
by February 19, 2019.
ADDRESSES: Interested parties are
encouraged to submit written
comments. Commenters are encouraged
to use the title ‘‘Company-Run Stress
Testing Requirements for FDIC-
supervised State Nonmember Banks and
State Savings Associations’’ to facilitate
the organization and distribution of
comments among the Agencies. You
may submit comments, identified by
RIN number, by any of the following
methods:
• Agency website: https://
www.FDIC.gov/regulations/laws/
federal/. Follow instructions for
submitting comments on the Agency
website.
• Email: Comments@FDIC.gov.
Include RIN 3064–AE84 on the subject
line of the message.
• Mail: Robert E. Feldman, Executive
Secretary, Attention: Comments, Federal
Deposit Insurance Corporation, 550 17th
Street NW, Washington, DC 20429.
• Hand Delivered/Courier: Comments
may be hand-delivered to the guard
station at the rear of the 550 17th Street
Building (located on F Street) on
business days between 7:00 a.m. and
5:00 p.m.
• Public Inspection: All comments
received must include the agency name
and RIN 3064–AE84 for this rulemaking.
All comments received will be posted
without change to https://www.fdic.gov/
regulations/laws/federal/, including any
personal information provided. Paper
copies of public comments may be
ordered from the FDIC Public
Information Center, 3501 North Fairfax
Drive, Room E–1002, Arlington, VA
22226 by telephone at 1 (877) 275–3342
or 1 (703) 562–2200.
FOR FURTHER INFORMATION CONTACT:
Ryan Sheller, Section Chief, (202) 412–
4861, RSheller@FDIC.gov, Large Bank
Supervision, Division of Risk
Management Supervision; Annmarie
Boyd, Counsel, (202) 898–3714, aboyd@
FDIC.gov; or Benjamin Klein, Counsel,
(202) 898–7027, bklein@FDIC.gov; Legal
Division, Federal Deposit Insurance
Corporation, 550 17th Street NW,
Washington, DC, 20429.
SUPPLEMENTARY INFORMATION:
I. Background
Prior to the enactment of EGRRCPA,
section 165(i)(2) of the Dodd-Frank Wall
Street Reform and Consumer Protection
Act 1 (Dodd-Frank Act) required a
financial company, including an
insured depository institution, with
total consolidated assets of more than
$10 billion and regulated by a primary
Federal regulatory agency to conduct
annual stress tests and submit a report
to the Board of Governors of the Federal
Reserve System (Board) and to its
primary federal regulatory agency.
Section 165(i)(2)(C) required each
primary Federal regulator to issue
consistent and comparable regulations
to: (1) Implement the stress testing
requirements, including establishing
methodologies for conducting stress
tests that provided for at least three
different sets of conditions, including
baseline, adverse, and severely adverse;
(2) establish the form and content of the
required reports, and (3) require
companies to publish a summary of the
stress test results.
In October 2012, the FDIC published
in the Federal Register its rule
implementing the Dodd-Frank Act stress
testing requirement.2 The FDIC
regulation at 12 CFR part 325
implements the company-run stress test
requirements of section 165(i)(2) of the
Dodd-Frank Act with respect to state
nonmember banks and state savings
associations with more than $10 billion
in assets (covered banks). Although 12
CFR part 325 applies to all covered
banks that exceed $10 billion in assets,
the regulation differentiates between
‘‘$10 billion to $50 billion covered
banks’’ and ‘‘over $50 billion covered
banks.’’
EGRRCPA, enacted on May 24, 2018,3
amended certain aspects of the
company-run stress-testing
requirements in section 165(i)(2) of the
Dodd-Frank Act. Specifically, section
401 of EGRRCPA raises the minimum
asset threshold for the company-run
stress testing requirement from $10
billion to $250 billion; replaces the
requirement for banks to conduct stress
tests ‘‘annually’’ with the requirement to
conduct stress tests ‘‘periodically;’’ and
no longer requires the ‘‘adverse’’ stress
testing scenario, thus reducing the
number of required stress testing
scenarios from three to two. The
EGRRCPA amendments to the section
165(i)(2) stress testing requirements are
effective eighteen months after
enactment.
Prior to the enactment of EGRRCPA,
on April 2, 2018, the FDIC issued a
notice of proposed rulemaking that also
proposed certain revisions to the FDIC
VerDate Sep<11>2014 16:22 Dec 27, 2018 Jkt 247001 PO 00000 Frm 00001 Fmt 4702 Sfmt 4702 E:\FR\FM\28DEP1.SGM 28DEP1
amozie on DSK3GDR082PROD with PROPOSALS1
67150 Federal Register / Vol. 83, No. 248 / Friday, December 28, 2018 / Proposed Rules
4 83 FR 13880 (April 2, 2018).
stress testing regulations (April NPR).4
Certain changes proposed in the April
NPR, particularly those establishing a
stress testing transition process for
‘‘over $50 billion covered banks’’ are no
longer relevant as a result of EGRRCPA’s
increase in the stress testing asset
threshold to $250 billion. However,
other revisions originally proposed in
the April NPR remain necessary to
ensure the FDIC’s stress testing
regulations remain consistent with those
of the Board and the Office of the
Comptroller of the Currency (OCC).
II. Description of the Proposed Rule
A. Covered Banks
As described above, section 401 of
EGRRCPA amended section 165 of the
Dodd-Frank Act by raising the
minimum asset threshold for banks
required to conduct stress tests from $10
billion to $250 billion. The proposed
rule would implement this change by
eliminating the two existing
subcategories of ‘‘covered bank’’—‘‘$10
to $50 billion covered bank’’ and ‘‘over
$50 billion covered bank’’—and revising
the term ‘‘covered bank’’ to mean a State
nonmember bank or State savings
association with average total
consolidated assets that are greater than
$250 billion. In addition, the proposal
would make certain technical and
conforming changes to 12 CFR part 325
in order to consolidate requirements,
such as those related to reporting and
publication, that are currently
referenced separately with respect to
$10 billion to $50 billion covered banks
and over $50 billion covered banks.
B. Frequency of Stress Testing
Section 401 of EGRRCPA also
changed the requirement under section
165 of the Dodd-Frank Act to conduct
stress tests from ‘‘annual’’ to ‘‘periodic.’’
Consistent with proposals by the Board
and the OCC, the NPR proposes that, in
general, an FDIC-supervised institution
that is a covered bank as of December
31, 2019, would be required to conduct,
report, and publish a stress test once
every two years, beginning on January 1,
2020, and continuing every even-
numbered year thereafter (i.e., 2022,
2024, 2026, etc.). The proposed rule
would also add a new defined term,
‘‘reporting year,’’ to the definitions at 12
CFR 325.2. A covered bank’s reporting
year would be the year in which a
covered bank must conduct, report, and
publish its stress test. As noted above,
the ‘‘reporting year’’ for most covered
banks would generally be every even-
numbered year. However, under the
NPR, covered banks that are subsidiaries
of global systemically important bank
holding companies or bank holding
companies that have $700 billion or
more in total assets or cross-
jurisdictional activity of $75 billion or
more would be required to conduct,
report, and publish stress test results on
the same schedule as their bank holding
companies, which would be annually
under rules proposed by the Board.
Subsequent to these changes, some
covered banks would have a biennial
reporting year (biennial stress testing
covered banks) while others would have
an annual reporting year (annual stress
testing covered banks). In either case,
under the NPR, the dates and deadlines
in the FDIC’s stress testing rule would
apply for each reporting year for a
covered bank. For example, a biennial
stress testing covered bank preparing its
2022 stress test would rely on financial
data available as of December 31, 2021;
use stress test scenarios that would be
provided by the FDIC no later than
February 15, 2022; provide its report of
the stress test to the FDIC by April 5,
2022; and publish a summary of the
results of its stress test in the period
starting June 15 and ending July 15 of
2022.
Based on the FDIC’s experience
overseeing and reviewing the results of
company-run stress testing, the FDIC
believes that a biennial stress testing
cycle would be appropriate for most
covered banks. For covered banks that
would stress test on a biennial cycle, the
FDIC nonetheless expects this level of
frequency to provide the FDIC and the
covered bank with information that is
sufficient to satisfy the purposes of
stress testing. In addition, the FDIC
would continue to review the covered
bank’s stress testing processes and
procedures. Under the proposed rule, all
covered banks that would conduct stress
tests on a biennial basis would be
required to conduct stress tests in the
same reporting year (i.e., the reporting
years for biennial stress testing covered
banks would be synchronized). By
requiring these covered banks to
conduct their stress tests in the same
reporting year, the proposal would
continue to allow the FDIC to make
comparisons across banks for
supervisory purposes and assess
macroeconomic trends and risks to the
banking industry.
As discussed above, under the
proposed rule, only certain covered
banks would be required to conduct
annual stress tests. This subset would be
limited to covered banks that are
consolidated under holding companies
that are required to conduct stress tests
more frequently than once every other
year. This requirement reflects the
FDIC’s expectation that covered banks
that would be required to stress test on
an annual basis would be subsidiaries of
the largest and most systemically
important banking organizations, (i.e.,
subsidiaries of global systemically
important bank holding companies or
bank holding companies that have $700
billion or more in total assets or cross-
jurisdictional activity of $75 billion).
This treatment aligns with the agencies’
long-standing policy of applying similar
standards to holding companies and
their subsidiary banks.
C. Removal of ‘‘Adverse’’ Scenario
As enacted by the Dodd-Frank Act,
section 165(i)(2)(C) required the FDIC to
establish methodologies for conducting
stress tests and further required the
inclusion of at least three different
stress-testing scenarios: ‘‘baseline,’’
‘‘adverse,’’ and ‘‘severely adverse.’’
EGRRCPA amended section 165(i) to no
longer require the FDIC to include an
‘‘adverse’’ stress-testing scenario and to
reduce the minimum number of
required stress test scenarios from three
to two. Given that the ‘‘adverse’’ stress-
testing scenario has provided limited
incremental information to the FDIC
and market participants beyond what
the ‘‘baseline’’ and ‘‘severely adverse’’
stress testing scenarios provide, the NPR
proposes to remove the ‘‘adverse’’
scenario in the FDIC’s stress testing rule
and to maintain the requirement to
conduct stress tests under the
‘‘baseline’’ and ‘‘severely adverse’’ stress
testing scenarios. The NPR would also
amend the definition of ‘‘severely
adverse scenario’’ so that the term is
defined relative to the ‘‘baseline
scenario,’’ rather than relative to the
‘‘adverse scenario.’’
D. Transition Process for Covered Banks
Currently, 12 CFR 325.3 provides for
a transition period between when a
bank becomes a covered bank and when
the bank must report its first stress test.
The NPR proposes to revise the
transition period in 12 CFR 325.3 to
conform to the other changes in this
proposal. Accordingly, proposed
paragraph (a)(2) would generally require
a state nonmember bank or state savings
association that becomes a covered bank
after December 31, 2019, to conduct its
first stress test under this part in the first
reporting year that begins more than
three calendar quarters after the date the
state nonmember bank or state savings
association becomes a covered bank. For
example, if a covered bank that
conducts stress tests on a biennial basis
becomes a covered bank on March 31 of
a non-reporting year (e.g., 2023), the
VerDate Sep<11>2014 16:22 Dec 27, 2018 Jkt 247001 PO 00000 Frm 00002 Fmt 4702 Sfmt 4702 E:\FR\FM\28DEP1.SGM 28DEP1
amozie on DSK3GDR082PROD with PROPOSALS1
4 83 FR 13880 (April 2, 2018).
stress testing regulations (April NPR).4
Certain changes proposed in the April
NPR, particularly those establishing a
stress testing transition process for
‘‘over $50 billion covered banks’’ are no
longer relevant as a result of EGRRCPA’s
increase in the stress testing asset
threshold to $250 billion. However,
other revisions originally proposed in
the April NPR remain necessary to
ensure the FDIC’s stress testing
regulations remain consistent with those
of the Board and the Office of the
Comptroller of the Currency (OCC).
II. Description of the Proposed Rule
A. Covered Banks
As described above, section 401 of
EGRRCPA amended section 165 of the
Dodd-Frank Act by raising the
minimum asset threshold for banks
required to conduct stress tests from $10
billion to $250 billion. The proposed
rule would implement this change by
eliminating the two existing
subcategories of ‘‘covered bank’’—‘‘$10
to $50 billion covered bank’’ and ‘‘over
$50 billion covered bank’’—and revising
the term ‘‘covered bank’’ to mean a State
nonmember bank or State savings
association with average total
consolidated assets that are greater than
$250 billion. In addition, the proposal
would make certain technical and
conforming changes to 12 CFR part 325
in order to consolidate requirements,
such as those related to reporting and
publication, that are currently
referenced separately with respect to
$10 billion to $50 billion covered banks
and over $50 billion covered banks.
B. Frequency of Stress Testing
Section 401 of EGRRCPA also
changed the requirement under section
165 of the Dodd-Frank Act to conduct
stress tests from ‘‘annual’’ to ‘‘periodic.’’
Consistent with proposals by the Board
and the OCC, the NPR proposes that, in
general, an FDIC-supervised institution
that is a covered bank as of December
31, 2019, would be required to conduct,
report, and publish a stress test once
every two years, beginning on January 1,
2020, and continuing every even-
numbered year thereafter (i.e., 2022,
2024, 2026, etc.). The proposed rule
would also add a new defined term,
‘‘reporting year,’’ to the definitions at 12
CFR 325.2. A covered bank’s reporting
year would be the year in which a
covered bank must conduct, report, and
publish its stress test. As noted above,
the ‘‘reporting year’’ for most covered
banks would generally be every even-
numbered year. However, under the
NPR, covered banks that are subsidiaries
of global systemically important bank
holding companies or bank holding
companies that have $700 billion or
more in total assets or cross-
jurisdictional activity of $75 billion or
more would be required to conduct,
report, and publish stress test results on
the same schedule as their bank holding
companies, which would be annually
under rules proposed by the Board.
Subsequent to these changes, some
covered banks would have a biennial
reporting year (biennial stress testing
covered banks) while others would have
an annual reporting year (annual stress
testing covered banks). In either case,
under the NPR, the dates and deadlines
in the FDIC’s stress testing rule would
apply for each reporting year for a
covered bank. For example, a biennial
stress testing covered bank preparing its
2022 stress test would rely on financial
data available as of December 31, 2021;
use stress test scenarios that would be
provided by the FDIC no later than
February 15, 2022; provide its report of
the stress test to the FDIC by April 5,
2022; and publish a summary of the
results of its stress test in the period
starting June 15 and ending July 15 of
2022.
Based on the FDIC’s experience
overseeing and reviewing the results of
company-run stress testing, the FDIC
believes that a biennial stress testing
cycle would be appropriate for most
covered banks. For covered banks that
would stress test on a biennial cycle, the
FDIC nonetheless expects this level of
frequency to provide the FDIC and the
covered bank with information that is
sufficient to satisfy the purposes of
stress testing. In addition, the FDIC
would continue to review the covered
bank’s stress testing processes and
procedures. Under the proposed rule, all
covered banks that would conduct stress
tests on a biennial basis would be
required to conduct stress tests in the
same reporting year (i.e., the reporting
years for biennial stress testing covered
banks would be synchronized). By
requiring these covered banks to
conduct their stress tests in the same
reporting year, the proposal would
continue to allow the FDIC to make
comparisons across banks for
supervisory purposes and assess
macroeconomic trends and risks to the
banking industry.
As discussed above, under the
proposed rule, only certain covered
banks would be required to conduct
annual stress tests. This subset would be
limited to covered banks that are
consolidated under holding companies
that are required to conduct stress tests
more frequently than once every other
year. This requirement reflects the
FDIC’s expectation that covered banks
that would be required to stress test on
an annual basis would be subsidiaries of
the largest and most systemically
important banking organizations, (i.e.,
subsidiaries of global systemically
important bank holding companies or
bank holding companies that have $700
billion or more in total assets or cross-
jurisdictional activity of $75 billion).
This treatment aligns with the agencies’
long-standing policy of applying similar
standards to holding companies and
their subsidiary banks.
C. Removal of ‘‘Adverse’’ Scenario
As enacted by the Dodd-Frank Act,
section 165(i)(2)(C) required the FDIC to
establish methodologies for conducting
stress tests and further required the
inclusion of at least three different
stress-testing scenarios: ‘‘baseline,’’
‘‘adverse,’’ and ‘‘severely adverse.’’
EGRRCPA amended section 165(i) to no
longer require the FDIC to include an
‘‘adverse’’ stress-testing scenario and to
reduce the minimum number of
required stress test scenarios from three
to two. Given that the ‘‘adverse’’ stress-
testing scenario has provided limited
incremental information to the FDIC
and market participants beyond what
the ‘‘baseline’’ and ‘‘severely adverse’’
stress testing scenarios provide, the NPR
proposes to remove the ‘‘adverse’’
scenario in the FDIC’s stress testing rule
and to maintain the requirement to
conduct stress tests under the
‘‘baseline’’ and ‘‘severely adverse’’ stress
testing scenarios. The NPR would also
amend the definition of ‘‘severely
adverse scenario’’ so that the term is
defined relative to the ‘‘baseline
scenario,’’ rather than relative to the
‘‘adverse scenario.’’
D. Transition Process for Covered Banks
Currently, 12 CFR 325.3 provides for
a transition period between when a
bank becomes a covered bank and when
the bank must report its first stress test.
The NPR proposes to revise the
transition period in 12 CFR 325.3 to
conform to the other changes in this
proposal. Accordingly, proposed
paragraph (a)(2) would generally require
a state nonmember bank or state savings
association that becomes a covered bank
after December 31, 2019, to conduct its
first stress test under this part in the first
reporting year that begins more than
three calendar quarters after the date the
state nonmember bank or state savings
association becomes a covered bank. For
example, if a covered bank that
conducts stress tests on a biennial basis
becomes a covered bank on March 31 of
a non-reporting year (e.g., 2023), the
VerDate Sep<11>2014 16:22 Dec 27, 2018 Jkt 247001 PO 00000 Frm 00002 Fmt 4702 Sfmt 4702 E:\FR\FM\28DEP1.SGM 28DEP1
amozie on DSK3GDR082PROD with PROPOSALS1