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Fed Gives Break to Regional Banks in Annual Stress-Test Demands

  • Central bank releases final rule to relax qualitative testing
  • Banks above $250 billion in assets still facing requirement

Large regional banks and some foreign lenders will get a big break in the Federal Reserve’s annual stress tests as the regulator said Monday it would no longer evaluate their plans for managing capital and risk.

Letting banks with less than $250 billion in assets out of the so-called qualitative side of the stress tests is a particularly welcome move for the industry, because that part of the test has often proved to be a stumbling block for the companies. In issuing the new rule, the Fed decided that regional banks such as BB&T Corp., Fifth Third Bancorp and Zions Bancorporation don’t pose the kind of threat to the financial system the tests are meant to curtail.