What happened
According to the Federal Reserve Board's press release on September 30, 2026, the Board finalized changes aimed at enhancing the transparency and public accountability of its stress test and reducing volatility in stress-test-related capital requirements.
The release says the two final rules are largely similar to the proposed rules from 2025, and that the Board also requested comment on a separate proposal to better capture differences in banks' business models that generate fee income.
“"Today's changes preserve its resilience by ensuring that it is transparent, granular, and risk-sensitive."”
Key changes in the final rules
According to the Board's statement, the first final rule requires the Board to invite public input annually on the stress test scenarios and any material model changes. The rule updates the framework that guides the design of the hypothetical scenarios and adopts the models that will be used for the 2027 stress test. The first rule also makes several adjustments to the stress test calendar and updates the global market shock component. Under that update, banks with large trading books will now be tested against two global market shock components each year, and the Board will use the shock that produces the largest losses for each firm to calculate the firm's stress test results.
The second final rule, the Board said, requires that when calculating stress capital buffer requirements the Board will average the results from the two most recent annual supervisory stress tests for firms subject to the stress test in both years. The Board will begin averaging stress capital buffer requirements in 2028 to ensure that only models incorporating public input are used in the calculation.
Proposal on noninterest income model and comment period
According to the press release, the Board also requested comment on a proposal to revise the Board's noninterest income model. The proposal would improve the stress test's ability to capture business model diversity across firms and, if adopted, would replace the current noninterest income model that projects each bank's fee income under stress. The release says comments are due 60 days after publication in the Federal Register.
Background and expected impact
The Federal Reserve Board's release says the Board conducts stress tests to ensure that large banks are sufficiently capitalized. The release states that, together, the changes are likely to reduce year-over-year volatility in capital requirements by approximately 50 percent and are not expected to materially affect aggregate capital requirements.
The release includes a statement from Vice Chair for Supervision Michelle W. Bowman describing the stress test as essential and saying the changes will make it more transparent, granular, and risk-sensitive.
What to watch
According to the press release, the Board will use the adopted models for the 2027 stress test and will begin averaging stress capital buffer requirements in 2028. Comments on the proposed noninterest income model are due 60 days after publication in the Federal Register.
