Are we really supposed to believe the Fed hides anything from their pals?
Executives at the biggest U.S. banks are sharing notes with each other before their next round of tests with federal regulators.
Banks are struggling to figure out what exactly the U.S. Federal Reserve is looking for when it conducts its annual “stress tests,” which measure how banks will hold up during times of economic turmoil, bank executives, former Fed officials and consultants involved in the process told Reuters.
In gatherings organized by industry groups as well as more informal forums, executives say they have swapped tips about everything from how to best communicate their data – regulators evidently appreciate robust summaries — to how to project legal losses in a hypothetical downturn.
The Federal Reserve deliberately keeps quiet about how it measures lenders’ performance during downturns, to prevent banks from finding loopholes in the process that would allow them to take more risk, senior regulators have said publicly. It has given…
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