Fed’s Tarullo Says Stress Tests to Get Tougher for Big Banks
By Jesse Hamilton, Jennifer Surane, and Yalman Onaran
The Federal Reserve plans to make changes to its annual stress tests that will penalize Wall Street banks for being large and complex, while making the exams less burdensome on smaller competitors, said Fed Governor Daniel Tarullo. The Fed will probably pile additional capital demands into exams for eight of the biggest U.S. lenders, Tarullo said Thursday in an interview with David Westin on Bloomberg Television. Meanwhile, the agency is considering ways to simplify the tests for regional banks that have less impact on the health of the global financial system — likely exempting those companies from one challenging aspect of the exercise…. Karen Shaw Petrou, managing partner of Washington-based research firm Federal Financial Analytics, said Tarullo’s remarks indicate the Fed is trying to “force the biggest banks to make themselves smaller as quickly as possible.”