SIFMA: no compelling case for Fed to change CCAR/SCB status quo

The next few months will bring clarity to the extent and permanence of damage to the US economy. With all US states in various phases of reopening and some positive developments regarding COVID-19 virus containment, there is no compelling case, particularly related to the capital markets, to step away from current validated methodologies for CCAR including sizing the stress capital buffer (SCB).

The banking system, by the Federal Reserve’s own assessment, entered this crisis sufficiently resilient. This affords the Federal Reserve the time to gain a better insight into economic trends. Pursuing a COVID-19 adjusted strategy to size the SCB, particularly at this point of the economic recovery, may result in a self-fulfilling prophecy.

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