WASHINGTON, D.C.—Shayna Olesiuk, Director of Banking Policy, issued the following statement in connection with the release of a new Fact Sheet: “The Fed’s Bank Stress Tests Protect Americans’ Jobs and Homes: They Need to Be Stronger.”

“Stress testing the biggest banks is one of the most important regulatory developments since the 2008 Financial Crisis. Stress tests gauge the resilience of banks to adverse economic conditions and evaluate their ability to avoid failure and bailouts. When stress tests are independent, strong, and transparent, they can restore faith in the banking system and strengthen the financial system. But when stress tests are compromised or weakened, they can give false comfort, make crashes and bailouts more likely, and endanger Main Street families, businesses, and community banks.

“The stress tests that were conducted directly following the 2008 Financial Crisis were a great success because they restored confidence in the financial system at a time of severe uncertainty. Unfortunately, the Federal Reserve has severely weakened its stress testing framework over time. The latest attack threatens to further undermine and weaken the stress tests, leading to a future in which the test results provide entirely false comfort and surely result in insufficient capital requirements.”

“In our new fact sheet, we explain recent changes that are being considered for the Fed’s stress tests, how the stress testing structure has already been severely weakened, and a set of alternative changes that the Fed should implement to actually strengthen the stress testing program and restore its value to the financial regulators, banking system, economy, and the American people.”

The Fact Sheet is available here.

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Better Markets is a non-profit, non-partisan, and independent organization founded in the wake of the 2008 financial crisis to promote the public interest in the financial markets, support the financial reform of Wall Street and make our financial system work for all Americans again. Better Markets works with allies—including many in finance—to promote pro-market, pro-business and pro-growth policies that help build a stronger, safer financial system that protects and promotes Americans’ jobs, savings, retirements and more. To learn more, visit www.bettermarkets.org.