Fed Votes to Overhaul Stress Tests in Major Win for Wall Street Banks

Federal Reserve Vice Chair for Supervision Michelle Bowman said in a statement on Wednesday: "The stress test is an important part of our regulatory capital framework. These reforms maintain its robustness by ensuring the test is more transparent, granular, and risk-sensitive." The Fed said the two final rules are largely consistent with the versions proposed in 2025, which were welcomed by the banking industry at the time. The Fed's Board of Governors voted 6-1 to approve the changes to the annual stress test. The test was established after the 2008 financial crisis to assess how Wall Street banks would perform under hypothetical recession scenarios. In addition, the Fed sought comment on a plan to "better reflect differences in how different banks' business models generate fee income."