[Federal Register Volume 84, Number 29 (Tuesday, February 12, 2019)]
[Proposed Rules]
[Pages 3345-3349]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-27875]



[[Page 3345]]

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DEPARTMENT OF THE TREASURY

Office of the Comptroller of the Currency

12 CFR Part 46

[Docket ID OCC-2018-0035]
RIN 1557-AE55


Amendments to the Stress Testing Rules for National Banks and 
Federal Savings Associations

AGENCY: Office of the Comptroller of the Currency (OCC), Treasury.

ACTION: Notice of proposed rulemaking with request for comment.

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SUMMARY: The OCC is requesting comment on a proposed rule that would 
amend the OCC's company-run stress testing requirements for national 
banks and Federal savings associations, consistent with section 401 of 
the Economic Growth, Regulatory Relief, and Consumer Protection Act 
(EGRRCPA). Specifically, the proposed rule would revise the minimum 
threshold for national banks and Federal savings associations to 
conduct stress tests from $10 billion to $250 billion, revise the 
frequency by which certain national banks and Federal savings 
associations would be required to conduct stress tests, and reduce the 
number of required stress testing scenarios from three to two. The 
proposed rule would also make certain facilitating and conforming 
changes to the stress testing requirements.

DATES: Comments on the notice of proposed rulemaking must be received 
by March 14, 2019.

ADDRESSES: Commenters are encouraged to submit comments through the 
Federal eRulemaking Portal or email, if possible. Please use the title 
``Amendments to the Stress Testing Rules for National Banks and Federal 
Savings Associations'' to facilitate the organization and distribution 
of the comments. You may submit comments by any of the following 
methods:
    <bullet> Federal eRulemaking Portal--``Regulations.gov'': Go to 
www.regulations.gov. Enter ``OCC-2018-0035'' in the Search box and 
click ``Search.'' Click on ``Comment Now'' to submit public comments. 
Click on the ``Help'' tab on the Regulations.gov home page to get 
information on using Regulations.gov, including instructions for 
submitting public comments.
    <bullet> Email: <a href="/cdn-cgi/l/email-protection#a3d1c6c4d08dc0cccecec6cdd7d0e3ccc0c08dd7d1c6c2d08dc4ccd5"><span class="__cf_email__" data-cfemail="20524547530e434f4d4d454e5453604f43430e54524541530e474f56">[email protected]</span></a>.
    <bullet> Mail: Legislative and Regulatory Activities Division, 
Office of the Comptroller of the Currency, 400 7th Street SW, Suite 3E-
218, Washington, DC 20219.
    <bullet> Hand Delivery/Courier: 400 7th Street SW, Suite 3E-218, 
Washington, DC 20219.
    <bullet> Fax: (571) 465-4326.
    Instructions: You must include ``OCC'' as the agency name and 
``Docket ID OCC-2018-0035'' in your comment. In general, OCC will enter 
all comments received into the docket and publish the comments on the 
Regulations.gov website without change, including any business or 
personal information that you provide such as name and address 
information, email addresses, or phone numbers. Comments received, 
including attachments and other supporting materials, are part of the 
public record and subject to public disclosure. Do not include any 
information in your comment or supporting materials that you consider 
confidential or inappropriate for public disclosure.
    You may review comments and other related materials that pertain to 
this rulemaking action by any of the following methods:
    <bullet> Viewing Comments Electronically: Go to 
www.regulations.gov. Enter ``Docket ID OCC-2018-0035'' in the Search 
box and click ``Search.'' Click on ``Open Docket Folder'' on the right 
side of the screen. Comments and supporting materials can be viewed and 
filtered by clicking on ``View all documents and comments in this 
docket'' and then using the filtering tools on the left side of the 
screen. Click on the ``Help'' tab on the Regulations.gov home page to 
get information on using Regulations.gov. The docket may be viewed 
after the close of the comment period in the same manner as during the 
comment period.
    <bullet> Viewing Comments Personally: You may personally inspect 
comments at the OCC, 400 7th Street SW, Washington, DC 20219. For 
security reasons, the OCC requires that visitors make an appointment to 
inspect comments. You may do so by calling (202) 649-6700 or, for 
persons who are deaf or hearing-impaired, TTY, (202) 649-5597. Upon 
arrival, visitors will be required to present valid government-issued 
photo identification and submit to security screening in order to 
inspect comments.

FOR FURTHER INFORMATION CONTACT: Hein Bogaard, Lead Economic Expert, 
International Analysis and Banking Condition, (202) 649-5450; or Henry 
Barkhausen, Counsel, or Daniel Perez, Attorney, (202) 649-5490, Chief 
Counsel's Office; or for persons who are deaf or hearing-impaired, TTY, 
(202) 649-5597; Office of the Comptroller of the Currency, 400 7th 
Street SW, Washington, DC 20219.

SUPPLEMENTARY INFORMATION: 

I. Background

    Section 165(i) of the Dodd-Frank Wall Street Reform and Consumer 
Protection Act of 2010 (Dodd-Frank Act),\1\ as initially enacted, 
required a national bank or Federal savings association (FSA) 
(collectively, banks) with total consolidated assets of more than $10 
billion to conduct and report an annual stress test. In addition, 
section 165 required these banks to provide a report to the Office of 
the Comptroller of the Currency (OCC) at such time, in such form, and 
containing such information as the OCC may require.\2\ In addition, 
section 165 required the OCC to issue regulations that establish 
methodologies for banks conducting their stress test and required the 
methodologies to include at least three different stress-testing 
scenarios: ``baseline,'' ``adverse,'' and ``severely adverse.'' \3\ In 
October 2012, the OCC published in the Federal Register its rule 
implementing the Dodd-Frank Act stress testing requirement.\4\ The 
OCC's rule established two subgroups for covered institutions--``$10 to 
$50 billion covered institutions'' and ``$50 billion or over covered 
institutions''--and subjected the two subgroups to different stress 
test requirements and deadlines for reporting and disclosures. In 
February 2018, the OCC published a second rule making additional 
technical and conforming changes to the OCC's company-run stress 
testing regulations.\5\
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    \1\ Public Law 111-203, 124 Stat. 1376 (2010), codified at 12 
U.S.C. 5365.
    \2\ 12 U.S.C. 5365(i)(2)(B).
    \3\ 12 U.S.C. 5365(i)(2)(C).
    \4\ 77 FR 61238 (Oct. 9, 2012).
    \5\ 83 FR 7951 (Feb. 23, 2018).
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    The Economic Growth, Regulatory Relief, and Consumer Protection Act 
(EGRRCPA), enacted on May 24, 2018, amended certain aspects of the 
company-run stress testing requirement in section 165(i)(2) of the 
Dodd-Frank Act.\6\ Specifically, section 401 of EGRRCPA raises the 
minimum asset threshold for financial companies covered by the company-
run stress testing requirement from $10 billion to $250 billion in 
total consolidated assets; revises the requirement for banks to conduct 
stress tests ``annually'' and instead require them to conduct stress 
tests ``periodically''; and no longer requires the OCC to provide an 
``adverse'' stress-testing scenario, thus reducing the number of 
required stress test scenarios from three to two. The amendments made 
by section 401 of EGRRCPA applicable to financial

[[Page 3346]]

companies become effective eighteen months after EGRRCPA's 
enactment.\7\
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    \6\ Public Law 115-174, 132 Stat. 1296-1368 (2018).
    \7\ On July 6, 2018, the OCC, jointly with the Board and the 
FDIC, extended the deadline for all regulatory requirements related 
to company-run stress testing for depository institutions with 
average total consolidated assets of less than $100 billion until 
November 25, 2019. See Interagency statement regarding impact of the 
Economic Growth, Regulatory Relief, and Consumer Protection Act, 
July 6, 2018, available at https://www.occ.treas.gov/news-issuances/news-releases/2018/nr-ia-2018-69a.pdf.
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II. Description of the Proposed Rule

    The OCC is proposing to revise the OCC's stress testing rule, at 12 
CFR part 46, consistent with the amendments made by section 401 of the 
EGRRCPA (the proposed rule or proposal).\8\ The proposal would also 
make a few additional technical and facilitating changes to the stress 
testing rule.
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    \8\ In addition to requesting comment on this proposed rule, the 
OCC is currently reviewing the agency's guidance with respect to 
stress testing, in light of section 401 of EGRRCPA, and will issue 
amendments or rescissions as appropriate.
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A. Covered Institutions

    As described above, section 401 of EGRRCPA amends section 165 of 
the Dodd-Frank Act by raising the minimum asset threshold for banks 
required to conduct stress tests from $10 billion to $250 billion. The 
proposed rule implements this change by eliminating the two existing 
subcategories of ``covered institution''--``$10 to $50 billion covered 
institution'' and ``$50 billion or over covered institution''--and 
revising the term ``covered institution'' to mean a national bank or 
FSA with average total consolidated assets, calculated as required 
under this part, that are greater than $250 billion. In addition, the 
proposal makes certain technical and conforming changes to the rule in 
order to consolidate requirements that were applied differently to $10 
to $50 billion covered institutions and $50 billion or over covered 
institutions.

B. Frequency of Stress Testing

    EGRRCPA eliminates the requirement under section 165 of the Dodd-
Frank Act for covered institutions to conduct stress tests on an 
``annual'' basis and, instead, requires that they be ``periodic.'' The 
term ``periodic'' is not defined in EGRRCPA, and the OCC is proposing 
that, in general, a covered institution would be required to conduct, 
report, and publish a stress test once every two years, beginning on 
January 1, 2020, and continuing every even-numbered year thereafter 
(i.e., 2022, 2024, 2026, etc.). However, a covered institution that is 
consolidated under a holding company that is required to conduct a 
stress test at least once every calendar year (pursuant to regulations 
of the Board of Governors of the Federal Reserve (Board) at 12 CFR part 
252) would be required to conduct, report, and publish its stress test 
annually. The proposal also adds a new defined term, ``reporting 
year,'' to the definitions at Sec.  46.2. A covered institution's 
reporting year is the year in which a covered institution must conduct, 
report, and publish its stress test.
    Subsequent to these changes, some covered institutions would have a 
biennial reporting year (biennial stress testing covered institutions) 
while others would have an annual reporting year (annual stress testing 
covered institutions). In either case, the dates and deadlines in the 
OCC's stress testing rule would be interpreted relative to the covered 
institution's reporting year. For example, if a biennial stress testing 
covered institution is preparing its 2022 stress test, the covered 
institution would rely on financial data available as of December 31, 
2021; use stress test scenarios that would be provided by the OCC no 
later than February 15, 2022; provide its report of the stress test to 
the OCC by April 5, 2022; and publish a summary of the results of its 
stress test in the period starting June 15 and ending July 15 of 2022.
    Based on the OCC's experience overseeing and reviewing the results 
of company-run stress testing over more than five years, the OCC 
believes that a biennial stress testing cycle would be appropriate for 
most covered institutions. For covered institutions that would stress 
test on a biennial cycle, the OCC expects this level of frequency to 
provide the OCC and the covered institution with information that is 
sufficient to satisfy the purposes of stress testing, including: 
Assisting in an overall assessment of a covered institution's capital 
adequacy, identifying risks and the potential impact of adverse 
financial and economic conditions on the covered institution's capital 
adequacy, and determining whether additional analytical techniques and 
exercises are appropriate for a covered institution to employ in 
identifying, measuring, and monitoring risks to the soundness of the 
covered institution. In addition, the OCC would continue to review the 
covered intuition's stress testing processes and procedures. Under the 
proposed rule, all covered institutions that would conduct stress tests 
on a biennial basis would be required to conduct stress tests in the 
same reporting year. By requiring these covered institutions to conduct 
their stress tests in the same year, the proposal would continue to 
allow the OCC to make comparisons across banks for supervisory purposes 
and assess macroeconomic trends and risks to the banking industry.
    Under the proposal, certain covered institutions would be required 
to conduct annual stress tests. This subset would be limited to covered 
institutions that are consolidated under holding companies that are 
required to conduct stress tests more frequently than once every other 
year. This requirement reflects the OCC's expectation that covered 
institutions that would be required to stress test on an annual basis 
would be subsidiaries of the largest and most systemically important 
banking organizations (i.e., subsidiaries of global systemically 
important bank holding companies or bank holding companies that have 
$700 billion or more in total assets or $75 billion or more in cross-
border activity). This treatment aligns with the agencies' long-
standing policy of applying similar standards to holding companies and 
their subsidiary banks.

C. Removal of ``Adverse'' Scenarios

    Section 165(i) of the Dodd-Frank Act requires the OCC to establish 
methodologies for covered institutions conducting a stress test and 
requires the methodologies to include at least three different stress-
testing scenarios: ``baseline,'' ``adverse,'' and ``severely adverse.'' 
EGRRCPA amends section 165 to no longer require the OCC to include an 
``adverse'' stress-testing scenario and reduces the number of required 
stress test scenarios from three to two. Accordingly, this proposal 
removes references to the ``adverse'' stress test scenario in the OCC's 
stress testing rule. In the OCC's experience, the ``adverse'' stress-
testing scenario has provided limited incremental information to the 
OCC and market participants beyond what the ``baseline'' and ``severely 
adverse'' stress-testing scenarios provide. The proposal would maintain 
the requirement for the OCC to conduct supervisory stress tests under 
both a ``baseline'' and ``severely adverse'' stress-testing scenario.

D. Transition Process for Covered Institutions

    Section 46.3 of the OCC's current rule provides a transition period 
between when a bank becomes a covered institution and when the bank 
must report its first stress test. The OCC is amending the transition 
period in Sec.  46.3(b) to conform to the other changes in this 
proposal, including the establishment of annual and biennial stress 
testing covered institutions.

[[Page 3347]]

Under the proposal, ``A national bank or Federal savings association 
that becomes a covered institution shall conduct its first stress test 
under this part in the first reporting year that begins more than three 
calendar quarters after the date the national bank or Federal savings 
association becomes a covered institution, unless otherwise determined 
by the OCC in writing.'' For example, if a covered institution that 
conducts stress tests on a biennial basis becomes a covered institution 
on March 31 of a non-reporting year (e.g., 2023), the bank must report 
its first stress test in the subsequent calendar year (i.e., 2024), 
which is its first reporting year. If the same bank becomes a covered 
institution on April 1 of a non-reporting year, it skips the subsequent 
calendar year and reports its first stress test in the next reporting 
year (i.e., 2026). As with other aspects of the stress test rule, the 
OCC may change the transition period for particular covered 
institutions, as appropriate in light of the nature and level of the 
activities, complexity, risks, operations, and regulatory capital of 
the covered institutions, in addition to any other relevant factors.
    The proposal would not establish a transition period for covered 
institutions that move from a biennial stress testing requirement to an 
annual stress testing requirement. Accordingly, a covered institution 
that becomes an annual stress testing covered institution would be 
required to begin stress testing annually as of the next reporting 
year. The OCC expects covered institutions to anticipate and make 
arrangements for this development. To the extent that particular 
circumstances warrant the extension of a transition period, the OCC 
would do so based on its reservation of authority and supervisory 
discretion.

E. Review by Board of Directors

    The current Sec.  46.6 of the stress testing rule requires the 
board of directors of a covered institution, or a committee thereof, to 
review and approve the covered institution's stress testing policies 
and procedures as frequently as economic conditions or the condition of 
the institution may warrant, but no less than annually. The proposal 
would revise the frequency of this requirement from ``annual'' to 
``once every reporting year'' in order to make review by the board of 
directors consistent with the covered institution's stress testing 
cycle.

F. Reservation of Authority

    Section 46.5 of the stress testing rule states the OCC's 
reservation of the authority, pursuant to which the OCC may revise the 
frequency and methodology of the stress testing requirement as 
appropriate for particular covered institutions. The OCC is proposing 
to add the following sentence to paragraph (a)(2) of Sec.  46.5 to 
further clarify its reservation of authority: ``The OCC may also exempt 
one or more covered institutions from the requirement to conduct a 
stress test in a particular reporting year.''

G. Removal of Transition Language

    The proposal would remove certain transition language present in 
the current stress testing rule that is no longer current. For example, 
the proposal would strike the following sentence from paragraph (a)(2) 
of Sec.  46.6: ``Until December 31, 2015, or such other date specified 
by the OCC, a covered institution is not required to calculate its 
risk-based capital requirements using the internal ratings-based and 
advanced measurement approaches as set forth in 12 CFR part 3, subpart 
E.''

III. Request for Comment

    The OCC invites comment on all aspects of this proposed rule, 
including the following questions:
    1. The proposal would require a covered institution that is 
consolidated under a holding company that is required to conduct a 
stress test at least once every calendar year to treat every calendar 
year as a reporting year, unless otherwise determined by the OCC. Is 
this the appropriate frequency for this group of banks? What are the 
advantages and disadvantages of requiring a covered institution to 
conduct a stress test at the same frequency as, or at a different 
frequency than, its holding company?
    2. As an alternative to the requirement that a covered institution 
be required to stress test annually based on the stress testing 
requirements of its holding company, should the OCC establish separate 
criteria to capture certain large banks (e.g., banks above a specified 
asset threshold), regardless of whether they are consolidated under a 
holding company?
    3. All other covered institutions that are not required to stress 
test annually would be required to stress test biennially. Is this the 
appropriate frequency for this category of banks? Should the OCC 
further subdivide covered institutions into additional categories that 
would be subject to different frequency requirements?
    4. Is the length of the grace period for new covered institutions 
appropriate? Should the proposal establish a transition period for 
covered institutions that are already required to stress test and that 
move from a biennial stress testing requirement to an annual stress 
testing requirement?

IV. Regulatory Analysis

A. Riegle Community Development and Regulatory Improvement Act (RCDRIA)

    The RCDRIA requires that the OCC, in determining the effective date 
and administrative compliance requirements of new regulations that 
impose additional reporting, disclosure, or other requirements on 
insured depository institutions (``IDIs''), consider, consistent with 
principles of safety and soundness and the public interest, any 
administrative burdens that such regulations would place on depository 
institutions, including small depository institutions, and customers of 
depository institutions, as well as the benefits of such regulations. 
12 U.S.C. 4802. In addition, in order to provide an adequate transition 
period, new regulations that impose additional reporting, disclosures, 
or other new requirements on IDIs generally must take effect on the 
first day of a calendar quarter that begins on or after the date on 
which the regulations are published in final form.
    The proposed rule imposes no additional reporting, disclosure, or 
other requirements on IDIs, including small depository institutions, 
nor on the customers of depository institutions. The proposed rule 
would reduce the frequency of company-run stress tests for a subset of 
banks, raise the threshold for covered institutions from $10 billion to 
$250 billion, and reduce the number of required stress test scenarios 
from three to two for all banks. Nonetheless, in connection with 
determining an effective date for the proposed rule, the OCC invites 
comment on any administrative burdens that the proposed rule would 
place on depository institutions, including small depository 
institutions, and customers of depository institutions.

B. Regulatory Flexibility Act

    The Regulatory Flexibility Act, 5 U.S.C. 601 et seq. (``RFA''), 
requires an agency, in connection with a proposed rule, to prepare an 
Initial Regulatory Flexibility Analysis describing the impact of the 
proposed rule on small entities (defined by the Small Business 
Administration (``SBA'') for purposes of the RFA to include banking 
entities with total assets of $550 million or less) or to certify that 
the proposed rule would not have a significant economic impact on a 
substantial number of small entities.
    As of December 31, 2017, the OCC supervised approximately 886 small

[[Page 3348]]

entities.\9\ Because the proposed rule would only cover OCC-supervised 
banks with more than $250 billion in consolidated assets, the OCC 
anticipates that it would not impose additional costs on any OCC-
supervised institutions. Therefore, the OCC certifies that the proposed 
rule would not have a significant economic impact on a substantial 
number of OCC-supervised small entities.
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    \9\ The OCC bases its estimate of the number of small entities 
on the SBA's size thresholds for commercial banks and savings 
institutions, and trust companies, which are $550 million and $38.5 
million, respectively. Consistent with the General Principles of 
Affiliation 13 CFR 121.103(a), the OCC counts the assets of 
affiliated financial institutions when determining if it should 
classify an OCC-supervised institution as a small entity. The OCC 
uses December 31, 2017, to determine size because a ``financial 
institution's assets are determined by averaging the assets reported 
on its four quarterly financial statements for the preceding year.'' 
See footnote 8 of the U.S. Small Business Administration's Table of 
Size Standards.
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C. Paperwork Reduction Act of 1995

    The Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3521) states 
that no agency may conduct or sponsor, nor is the respondent required 
to respond to, an information collection unless it displays a currently 
valid Office of Management and Budget (OMB) control number. The 
information collection requirements in the proposal are found in 
Sec. Sec.  46.6 through 46.8.
    Currently, Sec.  46.6(c) requires that each covered institution 
establish and maintain a system of controls, oversight, and 
documentation, including policies and procedures, describing the 
covered institution's stress test practices and methodologies, and 
processes for validating and updating the covered institution's stress 
test practices. The board of directors of the covered institution must 
approve and review these policies at least annually. Section 46.7(a) 
requires each covered institution to report the results of their stress 
tests to the OCC annually. Section 46.8(a) requires that a covered 
institution publish a summary of the results of its annual stress tests 
on its website or in any other forum that is reasonably accessible to 
the public.
    Under the proposal, the increase in the applicability threshold for 
these requirements under the proposal would reduce the estimated number 
of respondents. In addition the frequency of these reporting, 
recordkeeping, and disclosure requirements for some institutions would 
be decreased to biennial.
    Estimated number of respondents: 8 (biennial testing: 4; annual 
testing: 4).
    Estimated total annual burden: 6,240 hours.
    Comments are requested on:
    (a) Whether the information collections are necessary for the 
proper performance of the OCC's functions, including whether the 
information has practical utility;
    (b) The accuracy of the OCC's estimates of the burden of the 
information collections, including the validity of the methodology and 
assumptions used;
    (c) Ways to enhance the quality, utility, and clarity of the 
information to be collected;
    (d) Ways to minimize the burden of information collections on 
respondents, including through the use of automated collection 
techniques or other forms of information technology; and
    (e) Estimates of capital or start-up costs and costs of operation, 
maintenance, and purchase of services to provide information.

D. Unfunded Mandates Reform Act of 1995

    The OCC analyzed the proposed rule under the factors set forth in 
the Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1532). Under this 
analysis, the OCC considered whether the proposed rule includes a 
federal mandate that may result in the expenditure by state, local, and 
Tribal governments, in the aggregate, or by the private sector, of $100 
million or more in any one year (adjusted annually for inflation).
    The proposed rule does not impose new mandates. Therefore, the OCC 
concludes that implementation of the proposed rule would not result in 
an expenditure of $100 million or more annually by state, local, and 
tribal governments, or by the private sector.

E. Plain Language

    Section 722 of the Gramm-Leach-Bliley Act requires the OCC to use 
plain language in all proposed and final rules published after January 
1, 2000. The OCC invites comment on how to make this proposed rule 
easier to understand.
    For example:
    <bullet> Has the OCC organized the material to inform your needs? 
If not, how could the OCC present the proposed rule more clearly?
    <bullet> Are the requirements in the proposed rule clearly stated? 
If not, how could the proposal be more clearly stated?
    <bullet> Does the proposed regulation contain technical language or 
jargon that is not clear? If so, which language requires clarification?
    <bullet> Would a different format (grouping and order of sections, 
use of headings, paragraphing) make the proposed regulation easier to 
understand? If so, what changes would achieve that?
    <bullet> Is this section format adequate? If not, which of the 
sections should be changed and how?
    <bullet> What other changes can the OCC incorporate to make the 
proposed regulation easier to understand?

List of Subjects in 12 CFR Part 46

    Banking, Banks, Capital, Disclosures, National banks, 
Recordkeeping, Reporting, Risk, Stress test.

Authority and Issuance

    For the reasons stated in the preamble, the OCC proposes to amend 
12 CFR part 46 as follows:

PART 46--STRESS TESTING

0
1. The heading for part 46 is revised to read as set forth above.
0
2. The authority citation for part 46 continues to read as follows:

    Authority:  12 U.S.C. 93a; 1463(a)(2); 5365(i)(2); and 
5412(b)(2)(B).

0
3. Section 46.2 is amended by:
0
a. Removing the definitions for ``$10 to $50 billion covered 
institution'' and ``$50 billion or over covered institution''.
0
b. Revising the definitions of ``Covered institution'' and 
``Scenarios''; and
0
c. Adding a definition for ``Reporting year'' in alphabetical order.
    The additions and revisions read as follows:


Sec.  46.2  Definitions.

* * * * *
    Covered institution means a national bank or Federal savings 
association with average total consolidated assets, calculated as 
required under this part, that are greater than $250 billion.
* * * * *
    Reporting year means the calendar year in which a covered 
institution must conduct, report, and publish its stress test.
* * * * *
    Scenarios means sets of conditions that affect the U.S. economy or 
the financial condition of a covered institution that the OCC 
determines are appropriate for use in the stress tests under this part, 
including, but not limited to, baseline and severely adverse scenarios.
* * * * *
0
4. Section 46.3 is amended by revising paragraphs (b) and (c) and 
removing paragraph (d) to read as follows:


Sec.  46.3  Applicability.

* * * * *
    (b) Covered institutions that become subject to stress testing 
requirements. A

[[Page 3349]]

national bank or Federal savings association that becomes a covered 
institution shall conduct its first stress test under this part in the 
first reporting year that begins more than three calendar quarters 
after the date the national bank or Federal savings association becomes 
a covered institution, unless otherwise determined by the OCC in 
writing.
    (c) Ceasing to be a covered institution or changing categories. A 
covered institution shall remain subject to the stress test 
requirements until total consolidated assets of the covered institution 
falls below the relevant size threshold for each of four consecutive 
quarters as reported by the covered institution's most recent Call 
Reports, effective on the ``as of'' date of the fourth consecutive Call 
Report.
0
5. Section 46.4 is amended by adding a sentence at the end of paragraph 
(a)(2) to read as follows:


Sec.  46.4  Reservation of authority.

    (a) * * *
    (2) * * * The OCC may also exempt one or more covered institutions 
from the requirement to conduct a stress test in a particular reporting 
year.
* * * * *
0
6. Section 46.5 is amended by:
0
a. Revising the section heading as set forth below;
0
b. Removing the word ``annual'' in the introductory paragraph;
0
c. Revising paragraphs (a) and (b); and
0
d. Adding a new paragraph (e).
    The revisions and addition read as follows:


Sec.  46.5   Stress testing.

* * * * *
    (a) Financial data. A covered institution must use financial data 
available as of December 31 of the calendar year prior to the reporting 
year.
    (b) Scenarios provided by the OCC. In conducting the stress test 
under this part, each covered institution must use the scenarios 
provided by the OCC. The scenarios provided by the OCC will reflect a 
minimum of two sets of economic and financial conditions, including 
baseline and severely adverse scenarios. The OCC will provide a 
description of the scenarios required to be used by each covered 
institution no later than February 15 of the reporting year.
* * * * *
    (e) Frequency. A covered institution that is consolidated under a 
holding company that is required, pursuant to applicable regulations of 
the Board of Governors of the Federal Reserve, to conduct a stress test 
at least once every calendar year must treat every calendar year as a 
reporting year, unless otherwise determined by the OCC. All other 
covered institutions must treat every even-numbered calendar year 
beginning January 1, 2020 (i.e., 2022, 2024, 2026, etc.), as a 
reporting year, unless otherwise determined by the OCC.


Sec.  46.6   [Amended]

0
7. Section 46.6 is amended by:
0
a. In paragraph (a) (2), by removing the last sentence; and
0
b. In paragraph (c) (2), by removing the word ``annually'' and 
replacing it with the phrase ``once every reporting year''.
0
8. Section 46.7 is amended by:
0
a. Revising paragraph (a);
0
b. Removing paragraph (b); and
0
c. Redesignating paragraph (c) as paragraph (b).
    The revision reads as follows:


Sec.  46.7  Reports to the Office of the Comptroller of the Currency 
and the Federal Reserve Board.

    (a) Timing. A covered institution must report to the OCC and to the 
Board of Governors of the Federal Reserve System, on or before April 5 
of the reporting year, the results of the stress test in the manner and 
form specified by the OCC.
* * * * *
0
9. Section 46.8 is amended by:
0
a. In paragraph (a):
0
i. Redesignating paragraph (a)(1) as paragraph (a) introductory text 
and revising it;
0
ii. Removing paragraph (a)(2); and
    iii. Redesignating paragraphs (a)(1)(i) and (a)(1)(ii) as 
paragraphs (a)(1) and (a)(2), respectively; and
0
b. In paragraph (b):
0
i. Removing the phrase ``an annual company-run'' and adding the phrase 
``a company-run'' in its place; and
0
ii. Removing the phrase ``annual stress test'' in the second sentence 
and adding the phrase ``stress test'' in its place.
    The revision reads as follows:


Sec.  46.8  Publication of disclosures.

* * * * *
    (a) Publication date. A covered institution must publish a summary 
of the results of its stress test in the period starting June 15 and 
ending July 15 of the reporting year, provided:
* * * * *

    Dated: December 18, 2018.
William A. Rowe,
Chief Risk Officer.
[FR Doc. 2018-27875 Filed 2-11-19; 8:45 am]
 BILLING CODE 4810-33-P


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