Fed points the finger at weak stress testing by US banks

Major US banks are failing on key risk management tasks, regulator says

Overoptimism and sloppy documentation are undermining the stress-testing process at the largest banks in the US, the Federal Reserve has warned.

In a report covering the 18 major banks with total assets over $50 billion, the Fed warned that all fell short of the standards laid down by the Comprehensive Capital Analysis and Review, the annual process of stress testing required by the Fed to assess the ability of banks to remain adequately capitalised under adverse circumstances.

The Fed did not