Federal Reserve Proposes Stress Capital Buffer Requirement
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Key takeaways:
- On April 10, 2018, the Federal Reserve Board (“FRB”) proposed a “stress capital buffer” requirement that would replace the fixed 2.5% portion of capital conservation buffer and a stress leverage buffer requirement that would apply on top of the 4% minimum tier 1 leverage ratio.
- The proposals would be integrated with the FRB’s regulatory capital, capital planning and stress testing regimes, as well as the recently proposed Stress Testing Policy Statement.
- These proposed changes reflect one of the last regulatory reform initiatives championed by former FRB Governor Daniel Tarullo before he stepped down in April 2017.