Capital Adequacy and Stress Testing: Understanding the CCAR (Federal Reserve) and DFAST (OCC) Programs
Executive, adviser & board member in technology-based businesses, especially in banking/ financial services; and information technology, telecom, and other high-tech industries. Specialist expertise in Risk management, regulation, and compliance for banking & financial services; and in big-data analytics. 35+ years’ experience in the US, Canada, Asia/Pacific, UK, and Europe. Results accomplished include: (a) building of custom Management Information applications in the fields of Risk, compliance and expense management, for major multinational banks based in the US and UK; (b) key contributions to planning of large infrastructure projects: e.g. Southern Cross undersea fiber-optic cable network, Australia & New Zealand to the US; and (c) $12 bn+ of structured finance for telecom; electric power; aviation & ground transportation, e.g. for Bay Area Rapid Transit (BART); British Telecommunications (BT) and Citicorp;
- MA in economics, Cambridge University
- Loeb Fellow, Harvard University
- Former Sloan Visiting Professor, New York University
- Expert advisor for more than $15 billion in structured finance transactions
- Senior Adviser (contractor) to Citibank; JP Morgan Chase; Barclays; and CapitalOne Bank
- Senior Managing Director with Essex Lake Group LLC
Banks and Credit Unions are subject to programs of the Federal Reserve, the Office of the Comptroller of the Currency (OCC), and the National Credit Union Administration (NCUA), which test whether each Bank or Credit Union has sufficient capital to navigate successfully through adverse future economic scenarios. The required analysis involves estimating the losses the Bank or Credit Union will incur in a range of specified scenarios of future economic downturns.
This webinar will help attendees understand the CCAR (Federal Reserve), DFAST (OCC), and NCUA programs; be aware of the kinds of analysis needed to meet the requirements of these programs; and be aware of the kinds of challenges that can arise. We will review the key provisions of the Dodd-Frank Act under which these programs have been established.
In this webinar, you will learn how the Federal Reserve’s CCAR program (Comprehensive Capital Analysis and Review) and the OCC’s DFAST program (Dodd-Frank Act Stress Test) work in practice; and review highlights of the NCUA program for Credit Unions. You will become familiar with the main concepts, methods, and analytical tools used in Capital Adequacy assessments/Stress Tests. Our review of methods will include an overview of a range of computer modeling approaches used, including Markov Chain models. The computing requirements that arise can sometimes be substantial. We will review examples of some of the challenges that have arisen; and how some banks have overcome them.
The rules vary between different categories of banks and other financial institutions, and they have changed recently. We will review the rules; how they vary between different categories of banks and other financial institutions; and the recent changes.
We will discuss real Capital Adequacy and Stress Test situations that have arisen; how this has impacted banks’ Capital Plans; decisions that had to be made as a result and how certain key difficulties were resolved.
These programs arose as a result of the 2006-2008 banking crisis: the Dodd-Frank Act, passed by Congress as a result of the crisis, gives the Federal Reserve, the OCC, and the NCUA extensive powers in this area of banking supervision.
This webinar will help attendees understand the CCAR (Federal Reserve) and DFAST (OCC) programs, and be aware of the kinds of workloads, deliverables, and challenges that arise for banks as a result of these programs. It also discusses a similar program operated by NCUA.
- Duties imposed by applicable laws, including the Dodd-Frank Act
- Effect of recent legislation revising certain aspects of the Dodd-Frank Act
- Organizations administering Capital Adequacy and Stress Test rules and programs, including the roles of the Federal Reserve; Office of the Comptroller of the Currency (OCC); and the National Credit Union Administration (NCUA)
- The Federal Reserve’s CCAR program
- The OCC’s DFAST (Dodd-Frank Act Stress Test) Program
- Stress testing rules of the National Credit Union Administration (NCUA)
- The role of Capital Plans
- Outcomes of CCAR and DFAST stress testing to date
- Examples of issues and challenges that have arisen for financial institutions in the CCAR, DFAST or NCUA programs
Course Level - Basic/Fundamental
Who Should Attend
- Employees and managers in the Risk function in banks or credit unions, especially those with supervisory responsibilities
- Compliance staff and management, in banks or credit unions, especially those with supervisory responsibilities
- Financial planning staff and managers
- Regulatory Affairs staff and managers
Why Should You Attend
If your duties in a Bank or Credit Union include, or are affected by, Risk management; financial planning (for example, concerning plans for payment of dividends); or compliance with the requirements of banking regulation and supervision, then you will benefit from the insights this webinar provides into the Capital Adequacy and Stress
Testing rules and programs of the Federal Reserve; the Office of the Comptroller of the Currency (OCC); and the National Credit Union Administration (NCUA). The outcomes of the interaction between a bank or other financial institution, and the Capital Adequacy and Stress Testing rules and programs, have important practical consequences. The process involves the bank or other financial institution submitting its Capital Plan, which indicates (for example) the planned payments of dividends to shareholders. Regulatory authorities in certain cases can disallow an institution’s Capital Plan, which can result in (for example) restrictions on the payment of dividends to shareholders. While it is usually possible to avoid such very undesirable outcomes, the issue is a very real one, and skilled analysis and planning are needed.
We will discuss real Capital Adequacy and Stress Test situations that have arisen; decisions that had to make concerning them; and how certain key difficulties were resolved.