Risk glossary

DFAST, or the Dodd-Frank Act Stress Test, aims to assess the financial resilience of US banks. The stress-testing regime measures how banks would perform under hypothetical economic scenarios and is designed to ensure firms have enough capital to continue lending during a severe recession.

The results of the test are used to set the stress capital buffer (SCB) for large institutions, and to determine the level of capital distributions that banks are allowed to make in the form of dividends or share buybacks.

DFAST applies each year for banks with assets greater than $250 billion and every two years for smaller lenders and federal savings associations.

The regime comprises two parts: a supervisory stress test conducted by the Federal Reserve; and a company-run stress test, which individual banks conduct before submitting the results to the regulator.

The supervisory stress test consists of a baseline scenario and a severely adverse scenario, which aims to replicate an unlikely but plausible economic shock. In 2025, the Federal Reserve announced it was planning to publish its stress-test models and assumptions as part of measures to improve transparency. Further changes to the regime are expected.

DFAST was formally introduced in 2013 to help address fragilities in the banking system that came to light during the global financial crisis. At first, the largest banks were subject to a separate, more detailed stress-testing regime known as the Comprehensive Capital Analysis and Review. However, CCAR was folded into DFAST in 2020 when regulators introduced the SCB. The Fed no longer uses the CCAR name, although some firms still refer to the term.

See also Stress-testing.

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