U.S. Regulators May Give Banks More Time to Run Stress Tests

U.S. banks with more than $10 billion in assets may get more time to institute internal stress testing required by the Dodd-Frank Act, U.S. banking regulators said today.

The regulators proposed rules in December and January to require the big banks -- holding companies under the Federal Reserve and national banks under the Office of the Comptroller of the Currency -- to start self-testing their portfolios against adverse scenarios annually. The proposals, which initially called for banks to conduct tests this year, may be revised with a September 2013 deadline, the regulators said in coordinated statements.

The extension would apply to banks between $10 billion and $50 billion in assets, according to the Fed, OCC and the Federal Deposit Insurance Corp. The OCC said in its statement today that banks with more than $50 billion may still have to run tests this year, with the agency reserving the right to let them “delay implementation on a case-by-case basis where warranted.”

Dodd-Frank, the 2010 regulatory overhaul, instituted the tests after the 2008 credit crisis in order to ensure banks were stable enough to withstand a future calamity. The final timeline for implementing the stress tests will be included in the rules eventually adopted by each agency.

In a separate stress-test requirement from Dodd-Frank, the Fed has conducted its own annual tests, reporting the first results in March. The Fed found 15 of the 19 largest U.S. banks, including JPMorgan Chase & Co., Goldman Sachs Group Inc. and Wells Fargo & Co. (WFC), could maintain adequate capital levels in a recession scenario in which they kept paying dividends and buying back stock.

To contact the reporter on this story: Jesse Hamilton in Washington at jhamilton33@bloomberg.net.

To contact the editor responsible for this story: Maura Reynolds at mreynolds34@bloomberg.net.

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