Banks Are Putting the Federal Reserve to the "Stress Test"

Cheddar News

A coalition of major banks and business groups, including JPMorgan, Citigroup, and Goldman Sachs, are suing the fed over its annual bank stress tests.

Transcript

00:00A significant legal challenge is brewing for the Federal Reserve.

00:03A coalition of major banks and business groups, including JP Morgan, Citigroup, and Goldman

00:08Sachs, is suing the Fed over its annual bank stress tests.

00:12The plaintiffs, led by the Bank Policy Institute and joined by several other groups, argue

00:18that the stress test process lacks transparency and fails to meet legal requirements for public

00:23input.

00:24They say, while they support stress testing, the current system imposes unclear and fluctuating

00:30capital requirements on banks.

00:34In response, the Fed announced plans to change the stress test process, seeking public comment

00:39to improve transparency and reduce volatility.

00:42However, they stress that the changes are unlikely to significantly alter capital requirements.

00:48The BPI welcomed the announcement but hinted that more action may be needed as they continue

00:53to push reforms they believe will benefit both law and policy.

00:57This legal battle could have major implications for the future of bank regulations and economic

01:02growth.

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