The American banking lobby sued the Federal Reserve in the context of stress testing

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U.S. banking lobby groups filed a lawsuit against the Federal Reserve on Tuesday over the central bank’s stress-testing framework, which has sparked a backlash between the industry and regulators.

The announcement comes a day after the federation He announced plans For “significant changes” to annual stress tests for large US banks to make the process more transparent and results more flexible.

“We appreciate the board’s announcement as a first step toward transparency and accountability, but we believe filing this lawsuit is necessary to protect our legal rights,” said Greg Baier, president and industry group leader of the Bank Policy Institute, one of the five. Plaintiffs in the case. It is the first lawsuit the team has filed against the federation.

The federation declined to comment.

The lawsuit comes ahead of what lobby groups say is a February deadline to file a court argument. Stress test Rules.

It also reflects more Aggressive approach In recent years in the banking industry. In the year In 2023 and 2024, lobby groups have run an ad campaign threatening to sue over the federal government’s implementation of the so-called Basel III endgame of new capital rules.

of Federation Since then, the plan for Basel III Endgame has been delayed, and the final outcome will be influenced by the incoming Trump administration.

The industry is now taking aim at stress tests, to see how well America’s biggest banks – including JPMorgan Chase, Goldman Sachs and Bank of America – can withstand a series of severe economic conditions.

of The most recent test He observed how banks are holding a 40 percent discount on commercial real estate prices and a 36 percent discount on home prices.

The Fed uses the results to calculate aggregate bank capital requirements, which are used to absorb losses.

In the year Stress tests played a role in restoring confidence in the banking sector following the 2008 financial crisis. However, they have recently come under criticism for the lack of transparency in the models used in the process and the variability of the results each year.

Goldman CEO David Solomon earlier this year called the process “unclear” and said the volatility “makes prudent capital management difficult for us and all of our peers.”