Key facts
- Nearly 75% of banks tested in both 2025 and 2026 DFAST would be worse off under the proposed averaging reform.
- The reform would alter the stress capital buffer calculation by averaging stress-test results over two years.
- The proposal was published by the Federal Reserve on April 17, 2025.
A proposed reform by the Federal Reserve concerning the Dodd-Frank Act stress tests (DFAST) would negatively affect a significant majority of participating banks. According to an analysis by Risk Quantum, approximately 75% of lenders tested in both 2025 and 2026 would experience higher capital depletion if the new averaging method were applied.
The reform, detailed in a proposal published on April 17, 2025, aims to modify the calculation of the stress capital buffer (SCB). This adjustment involves averaging a firm's stress-test results over a two-year period, a change that appears to disadvantage a substantial portion of the tested institutions.