Banking and Finance Law Daily OCC releases 2021 stress test scenarios
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Tuesday, February 16, 2021

OCC releases 2021 stress test scenarios

By Charles A. Menke, J.D.

The OCC’s supervisory scenarios include baseline, adverse, and severely adverse scenarios for covered national banks and federal savings associations to conduct the annual company-run stress tests.

The Office of the Comptroller of the Currency announced the release of economic and financial market scenarios for use in the upcoming Dodd-Frank Act Stress Test (DFAST) exercises for covered institutions. The supervisory scenarios include baseline and severely adverse scenarios, as described in the OCC’s rule that implements the stress test requirements of the Dodd-Frank Act. The 2021 scenario and background information is detailed in the OCC’s stress testing website, which includes 2021 DFAST Templates2021 DFAST Instructions, and 2021 DFAST Scenarios.

According to the OCC, "[t]he objective of the company-run stress test is to ensure that institutions have robust, forward-looking capital planning processes that account for their unique risks and to help ensure that institutions have sufficient capital to continue operations throughout times of economic and financial stress." Covered institutions are required to: (1) use the scenarios to conduct the stress tests; (2) submit the results of their company-run stress tests to the OCC by April 5; and (3) publish the results between June 15 and July 15. The results of the company-run stress tests provide the OCC with forward-looking information used in bank supervision and assist the agency in assessing the company’s risk profile and capital adequacy.

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