Fed Seeks to Smooth Capital Changes in Bank Stress Tests (1)

The US Federal Reserve will overhaul its stress tests of big US banks to smooth out changes in required capital levels from year to year under a proposal outlined by the central bank on Monday.

Results from the annual health check-up, which seek to gauge how lenders would fare during a hypothetical recession, would be averaged over two years, and the central bank would solicit public comment on the hypothetical scenarios each year before they’re finalized, the Fed said in its release.

“These proposed changes are not designed to materially affect overall capital requirements,” the release added.

The move comes ...