Wells Fargo Says Fed Stress Test Overhaul Should Benefit Banks

Wells Fargo said Monday that proposed changes to the Federal Reserve’s bank stress testing framework should be positive for banks. The assessment followed Fed Vice Chair for Supervision Michelle Bowman’s latest remarks on reforms expected to be finalized in the coming weeks.

The Fed plans to disclose more details about its stress-test models, economic scenarios and the variables used to calculate results. It also plans to average results from a bank’s two most recent tests when setting its stress capital buffer, which should reduce year-to-year swings in capital requirements. Wells Fargo also highlighted proposed 2027 changes to the model for noninterest income, designed to better reflect differences in banks’ business mixes.

Meanwhile, the Fed is considering additional stress scenarios and greater dialogue between banks and supervisors. The reforms aim to make capital requirements more predictable while preserving the tests’ role in assessing resilience.