Stress Testing Accountability and Transparency Act

Summary

Requires the Federal Reserve Board to publish and lock down key components of its supervisory stress-testing program: the models, assumptions, formulas, and methods used to run stress tests and to set stress capital buffers, with material changes permitted only through notice-and-comment rulemaking. It also requires the Fed to publicly release each stress-test scenario at least 60 days before a test, bars the Fed from conducting climate-related stress tests of bank holding companies or nonbank financial companies under its Dodd-Frank authority, and mandates a GAO evaluation and report on the effectiveness of the Fed’s stress tests every three years.

• Requires the Federal Reserve to publish the models, assumptions, formulas, and methods used in its stress tests within 90 days.
• Permits material methodological changes only through notice-and-comment rulemaking.
• Mandates public disclosure of each stress-test scenario at least 60 days before a test, starting the first calendar year after enactment.
• Bars the Fed from conducting climate-related stress tests of bank holding companies or nonbank financial companies under section 165(i).
• Directs the GAO to evaluate the Fed’s stress tests and report to Congress every three years on effectiveness for safety, soundness, and systemic stability.
• Requires the Fed to avoid double-counting risks between the stress capital buffer and risk-based capital requirements.
• Defines covered companies and stress capital buffer by reference to existing regulatory definitions rather than creating new categories.
• Does not compel the Fed to set a stress capital buffer for any particular company.