Fed’s approach to stressing op risk frustrates banks

Regulator’s stress test results overshoot banks’ numbers, threatening capital plans

Federal Reserve - autumn_credit Fed Reserve.jpg
Federal Reserve

When top US banks took part in the Federal Reserve’s revamped stress tests earlier this year, they submitted their own best guesses as to how they’d fare under the watchdog’s worst-case scenario. But the conclusions they arrived at regarding their overall projected losses were very different to those of their regulator – and some of them are placing the blame on how the Fed accounts for operational risk.

“The idea is that when you are looking at the numbers for the Fed scenario, generated by

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