On September 26, BPI submitted a comment letter to the Federal Reserve on proposed changes to the Capital Assessments and Stress Testing (CCAR) Reports (FR Y-14A/Q/M) related to the implementation of CECL. The letter highlights the disparities between firms’ company-run Dodd-Frank Act Stress Tests (DFAST) numbers incorporating CECL versus Fed DFAST/CCAR disclosed results, not including CECL and how the public may attribute these differences to perceived differences in risk profiles rather than the different assumptions used in CECL. The letter recommends that the Fed provide a template disclosure for firms to include in their own DFAST disclosures explaining that the disparities are the result of the different methodological approaches and the different assumptions related to CECL across firms. In addition to technical changes and clarifications, the letter also encourages more transparency in the Fed’s approach to incorporating CECL into supervisory stress tests.
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