Big banks' 2027 stress test models up for public tweak
Published Date: 10/2/2026
Notice
Summary
The Federal Reserve wants your thoughts on changes to the 2027 stress test models that big banks use to show they can handle tough times. These updates aim to make the test smarter and more accurate, helping banks and regulators spot risks better. If you have ideas, send them in by December 1, 2026—because these changes could affect how banks plan and protect your money.
Analyzed Economic Effects
11 provisions identified: 5 benefits, 4 costs, 2 mixed.
Noninterest-income model adjustments
The Board proposes adjustments to the noninterest income model used in the 2027 supervisory stress test to better capture differences across firms. The proposed model changes were informed by comments on the 2026 models and are part of the Board's 2027 model-development package.
Market, trading, and counterparty reporting overhaul
The Board proposes numerous changes to market-risk and counterparty schedules: remove certain equity data fields on Schedule B.1, clarify that credit baskets be reported by underlying risks on Schedule F sub-schedules, exclude internal hedges from Schedule L.5, clarify client-cleared derivatives and inter-affiliate reporting across Schedule L sub-schedules, and retire Schedule L.1.f and some metadata fields. These changes are intended to improve consistency, modeling, and the LCPD calculation.
Public input on material model changes
The Board says it will publish any material stress-test model changes for public input before using them. A model change is "material" if it would change a firm's post-stress common equity tier 1 ratio by 20 basis points or more, or change the average absolute firm change by 10 basis points, based on the prior year's severely adverse scenario.
Reimplement MSR data collection
The Board proposes to reimplement FR Y-14Q Schedule I (Mortgage Servicing Rights Valuation) to collect data on a firm's mortgage servicing rights, including loan volumes, capitalization rates, and prepayment information. This schedule would be reintroduced with limited edits and would be effective for the December 31, 2027 report date.
New corporate and CRE reporting fields
The Board proposes adding items to FR Y-14Q Schedule H.1 and H.2 such as "Guarantee Amount," "Securitization Flag," "Facility Internal Risk Rating," "Affordable Housing Flag," "Current Development Status," and a "Recourse Amount." These additions are proposed to help capture loan guarantees, securitizations, internal risk ratings, and affordable-housing and development status for commercial real estate exposures, effective for the December 31, 2027 report date.
Covenant violation 'cured' reporting option
The Board proposes to add a new reporting option on FR Y-14Q Schedule H.1 for covenant violations that are cured within a reporting quarter without amendment or waiver. This change is intended to better capture the structure and risks of loan covenants.
Retire and reclassify retail loan items
To simplify reporting and modeling, the Board proposes retiring FR Y-14Q Schedule M.1 item 4.c and moving the affected loans into item 4.e ("Other consumer loans"). The proposal follows changes requiring margin loans to be reported on FR Y-9C Schedule HC-C and aims to simplify how these exposures are captured.
Property valuation and workout reporting fixes
The Board proposes to add missing property valuation options (e.g., 'TAV--tax assessed value', 'purchase price', 'other') to FR Y-14M Schedule A.1 and B.1 and to add an 'other' option for refreshed valuation methods. The Board also proposes to require reporting '0' when a loan is in loss mitigation but no workout plan exists. These changes are effective for the December 31, 2027 report date.
PPNR items and securities coupon rates added
The Board proposes adding items to FR Y-14Q Schedule G (PPNR) to collect deposit beta segmentation, transfer pricing, and mark-to-market adjustments, and to revise Schedule B.1 to collect coupon rates for securities. These additions could inform future PPNR model development and support interest income projections.
Retire detailed securities-credit-loss schedules
The Board proposes to retire FR Y-14A Schedule A.3.f and A.3.g, which collected disaggregated expected credit loss and provision data for HTM and AFS securities, because the detailed breakdowns were of ancillary value and low materiality.
Estimated reporting burden and scope
The FR estimates that 35 holding companies (those with $100 billion or more in assets) would respond to the FR Y-14A/Q/M. The Board estimates a net increase in burden of +3,500 hours (FR Y-14A -280 hours; FR Y-14Q +3,780 hours; FR Y-14M 0), with total estimated annual burden hours of 763,928. All proposed revisions would be effective for the December 31, 2027 report date.
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