Fed Votes to Pass Stress Test Reform, Wall Street Giants Score a Major Victory

The Federal Reserve voted on Wednesday to pass the final rule for annual stress tests, handing a major victory to large Wall Street banks. Fed Vice Chair for Supervision Michelle Bowman said in a statement: "The stress test is an important part of our regulatory capital framework. Today's changes preserve the resilience of the stress test by ensuring it is transparent, granular, and risk-sensitive." The Fed's Board of Governors approved the annual stress test reform by a vote of 6 to 1. The test was established after the 2008 financial crisis to assess how large Wall Street banks would perform under hypothetical recession scenarios. The Fed said the two final rules are largely similar to the proposed rules from 2025, which were welcomed by the banking industry at the time. The agency also sought comment on a plan to "better reflect differences in banks' business models in generating revenue through fee income."