Powell Says Bank Stress Tests Need to Keep Evolving

In this June 19, 2019 file photo, Federal Reserve Chairman Jerome Powell speaks during a news conference following a two-day Federal Open Market Committee meeting in Washington. The Federal Reserve repeats its pledge to “act as appropriate” to sustain the current economic expansion, now the longest in U.S. history, while noting that most Fed officials have lowered their expectations for the future course of interest rates. (AP Photo/Manuel Balce Ceneta)

WASHINGTON (AP) — Federal Reserve Chairman Jerome Powell the Fed’s annual stress tests of the nation’s largest banks will need to evolve to keep pace with a changing financial system.

Powell calls the tests, which determine whether a bank could survive a severe economic downturn, were one of the “most successful supervisory innovations” achieved in the aftermath of the 2008 financial crisis.

But Powell says that it is important that the tests are adjusted from year to year to “explore even quite unlikely scenarios” to guard against complacency on the part of bank regulators and banks.

Powell’s remarks Tuesday were delivered in a video message at the start of a conference on stress tests being sponsored by the Fed’s Boston regional bank.


By AP reporter Martin Crutsinger


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