Editorial Board
The Fed’s Stress Tests Are Facing a Stress Test
Greater transparency will expose their flaws. Regulators should seize the opportunity to address them.
Needs windows.
Photographer: Samuel Corum/Bloomberg
The Federal Reserve faces a reckoning: Sometime soon, it’ll probably have to subject its stress tests to public scrutiny, highlighting serious flaws in what has become its primary tool for ensuring the resilience of the banking system.
Hopefully, it’ll take this as an opportunity for improvement. Failing that, it should reconsider its reliance on the exercise.