U.S. Senate Committee on Banking, Housing and Urban Affairs ranking member and House Financial Services Committee ranking member urge Federal Reserve to rescind stress test proposals and overhaul models before 2027 tests

In a joint letter, Senator Elizabeth Warren, ranking member of the U.S. Senate Committee on Banking, Housing, and Urban Affairs, and Congresswoman Maxine Waters, ranking member of the House Financial Services Committee, urged Federal Reserve Vice Chair for Supervision Michelle Bowman to immediately rescind the Fed's stress testing proposals and carry out a complete overhaul of its internal stress testing models before the 2027 stress tests. They argued that the proposals would weaken the stress testing framework and reduce banks' loss-absorbing capital cushions. The lawmakers said the Federal Reserve's October 2025 proposal publicized its internal models, proposed changes that would weaken those models, and would allow banks to help shape the economic scenarios used in the tests. In their view, the changes would make banks look stronger after shock events without reducing underlying risks and would cut capital cushions at the riskiest banks by more than USD 35 billion, leaving more scope for dividends and share buybacks and less capacity to absorb losses during periods of economic stress. The letter asks Bowman to provide written responses on the stress testing proposal and its implications for the stability of the US financial system by May 12, 2026.