- The Federal Reserve Board will limit the use of the "qualitative objection" in its Comprehensive Analysis and Review (CCAR) stress tests effective for the 2019 cycle.
- "The changes eliminate the qualitative objection for most firms due to the improvements in capital planning made by the largest firms," the Fed statement says.
- Firms that are newer to the CCAR tests, and thus may have less-established capital planning capabilities, will remain subject to a possible qualitative objection objection.
- For the largest and most complex financial firms, CCAR includes both quantitative evaluations of a firm's capital adequacy under stress and a qualitative evaluation of its abilities to determine capital needs for the future.
- "While the qualitative objection will no longer apply to certain firms, all firms will continue to be subject to a rigorous evaluation of their capital planning processes as part of CCAR," the Fed says.
- 18 firms will be subject to this year's CCAR exercise, with five of those firms subject to a possible qualitative objection--Barclays US, Credit Suisse-USA, Deutsche Bank USA, TD Group US Holdings, and UBS Americas Holdings.
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