On Wednesday, March 5, 2014, the Board of Governors of the Federal Reserve System (the "Board"), the Federal Deposit Insurance Corporation (the "FDIC") and the Office of the Comptroller of Currency (the "OCC") issued final guidance regarding stress testing for financial companies with total consolidated assets between $10 billion and $50 billion ("Medium-Sized Firms"). The guidance outlines the principles for implementing stress tests required under Section 165(i)(2) of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Dodd-Frank Act"). The guidance discusses supervisory expectations for stress test practices and offers additional details about methodologies that should be employed by Medium-Sized Firms.
Under rules issued by the agencies, Medium-Sized Firms are required to conduct stress tests annually, with the first company-run stress test to be conducted by March 31, 2014. However, this guidance confirms that Medium-Sized Firms are not subject to the Board's capital plan rule, the Board's annual Comprehensive Capital Analysis and Review, Dodd-Frank Act supervisory stress tests, or related data collections, which apply to bank holding companies with assets equal to or greater than $50 billion.