A group of big banks and business groups have filed a lawsuit against the US Federal Reserve (Fed) over its annual stress test procedures and transparency. The move is seen as a challenge to the Fed’s regulatory powers, with some arguing that Supreme Court rulings have emboldened them to push back against government oversight.
The Fed has been conducting these stress tests since 2009 to assess banks’ ability to withstand economic shocks. However, industry groups claim that the Fed’s procedures are too opaque and lack sufficient transparency.
In response to ongoing industry concerns, the Fed plans to make changes to its exams starting from 2025. These changes aim to improve the accuracy of the stress tests and provide more clarity on the Fed’s evaluation process.
The lawsuit is likely to spark a debate about the balance between regulatory oversight and industry interests. As the banking sector continues to evolve, it remains to be seen how these changes will play out in practice.
Source: https://www.reuters.com/legal/big-banks-planning-sue-us-fed-over-annual-stress-tests-cnbc-reports-2024-12-24