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# US Federal Reserve Proposes Greater Transparency in Bank Stress Test Methodology
- URL: https://www.theglobalbanker.com/federal-reserve-stress-test-transparency-methodology-proposal-2025/
- Published: 2025-10-24T19:45:00.000Z
- Updated: 2026-11-05T00:09:07.000Z
- Description: The Federal Reserve opened a public comment period on proposals to increase transparency in its stress test models and scenarios, covering its stress test models, the framework for designing scenarios, and the proposed scenarios for the 2026 test.
- Author: TGB Editorial Team
- Tags: Regulations, Americas, #archive

The Federal Reserve has put forward proposals to enhance the transparency of its annual bank stress testing framework, opening a formal public comment period on changes that would provide large financial institutions and the broader public with greater visibility into the models, assumptions, and scenarios that underpin the regulator's supervisory stress tests. The proposals were published on 24 October 2025, through a press release on the Federal Reserve's website.

Vice Chair for Supervision Michelle Bowman said the Board had 'committed to make significant improvements in the transparency of the stress tests' in an effort to avoid litigation, and that the proposals 'would promote due process'. Stress tests are constructed to assess whether the largest US banks retain sufficient capital buffers to absorb severe hypothetical losses.

#### GREATER MODEL AND SCENARIO DISCLOSURE PROPOSED

The proposals concern the disclosure of stress test models and the scenarios used to generate hypothetical loss projections. 

#### LEGAL CHALLENGE AND COMMENT DEADLINES

The stress testing framework faced a legal challenge from industry groups in December 2024.

Comments on the 2026 scenarios are due by 1 December 2025 and on the model and scenario-design proposals by 22 January 2026\. The Board estimated that, in aggregate, the proposed changes would not materially change capital requirements for firms subject to the test.