Federal Reserve finalizes rule to publish bank stress test models and scenarios

The Board of Governors of the Federal Reserve System has finalized amendments to Regulations Y, LL, and YY that make public the models and scenarios behind its supervisory bank stress tests and modify the stress capital buffer requirement. The final rule, Docket No. R–1873, was published in the Federal Register of Friday, 2 October 2026 and takes effect on 2 November 2026.

The action completes a proposal issued in October 2025 (90 FR 51856, 18 November 2025) and rests on section 165 of the Dodd-Frank Act, which requires enhanced prudential standards for bank holding companies with $250 billion or more in total consolidated assets. The Federal Reserve received 30 comments from banking organizations, trade associations, public interest groups and private individuals. Alongside the rule, the Board announced that it is finalizing the models for the 2027 stress test and proposing further model changes for public input.

What the Board will publish

The final rule codifies an enhanced disclosure process. The Board’s stress test models comprise twenty-one component models that produce projected regulatory capital ratios for each firm over a nine-quarter projection horizon.

• Comprehensive documentation of the models used, published by 15 May of the stress test year, with any additional adjustments published by 30 June.
• Proposed scenarios by 10 January of the stress test year, with a public input period of at least 30 days.
• Final scenarios by 28 February.
• Material model changes published for public input by 31 August of the prior year, beginning with the 2028 stress test cycle.

Materiality thresholds and calendar shifts

A model change is “material” if it could move any firm’s post-stress common equity tier 1 capital ratio by 20 basis points or more, or the average absolute change across firms by 10 basis points or more. The analysis covers firms with at least $100 billion in total consolidated assets.

• Capital plan submissions and company-run stress tests move from 5 April to 30 April.
• The window to request reconsideration of a preliminary stress capital buffer requirement extends from 15 calendar days to 15 business days.
• Disclosure of final stress capital buffer requirements moves from 31 August to 30 September.
• The Category IV opt-in date moves from 15 January to 5 January.
• The stress capital buffer effective date moves from 1 October to 1 January under the separate Volatility final rule.

Transparency versus model monoculture

Commenters were divided. Supporters said disclosure would improve the credibility of the test, strengthen market discipline and allow better capital planning. Critics warned that it would reduce the test’s dynamism, encourage “model monoculture” and let firms optimize their balance sheets to lower buffer requirements without reducing actual risk.

The Board retained the 31 December jump-off date rather than moving it to 30 September, and kept mitigating measures such as the Model Validation Council, a panel of external academic experts that advises on the models used in the supervisory stress test.

For large banks, the supervisory stress test becomes a public document: models, scenarios and material changes will be exposed to comment before they set capital requirements. The Board expects the changes to improve risk capture and credibility while preserving the test’s ability to adapt to emerging risks.

Source: Federal Register, Vol. 91, No. 190, 2 October 2026, Rules and Regulations, p. 62870 (official reference: 2026–20247).