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US Fed urged to curb reliance on its own stress-test models

Original architect of DFAST says supervisors should stop putting all their eggs in one basket

Eggs and dollar notes all in one basket

The US Federal Reserve’s annual bank stress test places too much reliance on the regulator’s own models and would be better served incorporating banks’ internal projections, according to one of the early architects of the regime.

“The US stress-testing regime is unusual in putting all of its stress-testing capital eggs into the supervisory model basket,” said Til Schuermann, who played a leading

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