Federal Reserve leaves the Network for Greening the Financial System (NGFS)

Stress tests are critical to the oversight of the largest, systemically important banks. Although the decision to make stress tests more transparent sounds like a good thing, it is actually making them weaker and less informative. When the models and tests are published, they become less robust. The test results give a false sense of security and allow for capital ejection to shareholders and bank executives, which leaves less protection to be used in a crisis and more liability for taxpayers.