Regulation

Regulator wants to guide banks through stress tests, not fail them

Randal Quarles says Fed is considering ways to make process more transparent

A top Federal Reserve official said his agency’s tests of whether big banks can withstand a future economic shock need to be more predictable and easier for firms to pass.

“Like a teacher, we don’t want banks to fail; we want them to learn,” Fed vice chair for supervision Randal Quarles said in a Tuesday speech at a Fed conference on stress tests. He added that failing banks “is not the purpose of stress testing, and it never has been”.

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