Senator Elizabeth Warren, Ranking Member of the U.S. Senate Committee on Banking, Housing and Urban Affairs, and Representative Maxine Waters, Ranking Member of the House Committee on Financial Services, sent a letter to Federal Reserve Chair Jerome Powell questioning why the Federal Reserve Board plans to seek changes to its stress testing framework and urging it to refrain from weakening the regime and to defend its legality in court. The lawmakers pointed to the Dodd-Frank Act requirement for annual stress tests of the nation’s largest banks and other systemically important institutions, and linked the framework to post-2008 efforts to restore confidence in the financial system. They highlighted that several big bank lobbying organizations sued the Federal Reserve Board in December 2024 over the stress testing framework, and cited the Fed’s announcement that it would soon seek public comment on “significant changes” intended to improve transparency and reduce volatility in resulting capital buffer requirements. The letter argued that pursuing such a rulemaking would effectively accommodate bank demands and increase risks to families, small businesses, and the broader economy. Warren and Waters asked Powell to respond to their questions by February 24, 2025, ahead of his hearings.
U.S. Senate Committee on Banking, Housing and Urban Affairs 2025-02-11
U.S. Senate Committee on Banking, Housing and Urban Affairs ranking member Warren and House Financial Services ranking member Waters press Powell to halt planned changes to bank stress tests
Senator Elizabeth Warren and Representative Maxine Waters urged Federal Reserve Chair Jerome Powell to maintain the current stress testing framework and defend its legality, following plans for significant changes. They emphasized the Dodd-Frank Act's requirement for annual stress tests and linked the framework to post-2008 financial stability efforts. The lawmakers warned that proposed changes could accommodate bank demands and increase economic risks.