Federal Reserve finalizes reforms to bank stress testing framework

The Federal Reserve Board has finalized a set of reforms to how it stress-tests the nation’s largest banks, marking the most significant overhaul of the framework since it became a regulatory cornerstone after the 2008 financial crisis. The changes, championed by Vice Chair Michelle W. Bowman, center on one deceptively simple idea: let people actually see how the models work. On February 4, 2026, the Board finalized the stress test scenarios for the upcoming cycle and confirmed that current stress capital buffer requirements will remain unchanged until 2027. That timeline gives the Fed room to incorporate public feedback before making any adjustments to capital rules, a deliberate move to avoid surprising banks with sudden shifts in how much capital they need to hold. What the reforms actually change The Fed proposed opening its stress test models to public comment back on October 24, 2025, with the comment period extending into early 2026. By soliciting public input on both the models and the scenario designs, the Fed is essentially inviting banks, academics, and market participants to pressure-test the pressure tests. The goal is to reduce what critics have long described as mode...