[House Report 119-366]
[From the U.S. Government Publishing Office]
119th Congress } { Report
HOUSE OF REPRESENTATIVES
1st Session } { 119-366
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STRESS TESTING ACCOUNTABILITY AND
TRANSPARENCY ACT
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November 4, 2025.--Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed
----------------
Mr. Hill of Arkansas, from the Committee on Financial Services,
submitted the following
R E P O R T
together with
MINORITY VIEWS
[To accompany H.R. 5270]
The Committee on Financial Services, to whom was referred
the bill (H.R. 5270) to require the Board of Governors of the
Federal Reserve System to issue rules to establish certain
methodologies and scenarios used in stress testing, and for
other purposes, having considered the same, reports favorably
thereon with an amendment and recommends that the bill as
amended do pass.
CONTENTS
Page
Purpose and Summary.............................................. 2
Background and Need for Legislation.............................. 3
Committee Consideration.......................................... 3
Related Hearings................................................. 4
Committee Votes.................................................. 4
Committee Oversight Findings..................................... 9
Performance Goals and Objectives................................. 9
Committee Cost Estimate.......................................... 9
New Budget Authority and CBO Cost Estimate....................... 9
Unfunded Mandates Statement...................................... 9
Earmark Statement................................................ 9
Federal Advisory Committee Act Statement......................... 10
Applicability to the Legislative Branch.......................... 10
Duplication of Federal Programs.................................. 10
Section-by-Section Analysis of the Legislation................... 10
Changes in Existing Law Made by the Bill, as Reported............ 11
Documents included by Unanimous Consent.......................... 12
Minority Views................................................... 14
The amendment is as follows:
Strike all after the enacting clause and insert the
following:
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Stress Testing Accountability and
Transparency Act''.
SEC. 2. RULEMAKING RELATED TO STRESS CAPITAL BUFFER REQUIREMENTS.
(a) In General.--Not later than 90 days after the date of the
enactment of this section, the Board of Governors of the Federal
Reserve System (in this Act referred to as the ``Board'') shall issue a
rule--
(1) establishing the models, assumptions, formulas, and other
decisional methodologies that are used to conduct any stress
test pursuant to section 165(i) of the Financial Stability Act
of 2010 (12 U.S.C. 5365(i)), including any such test that is
used to determine any component or subcomponent of the stress
capital buffer requirement for a covered company; and
(2) to determine, where the Board has supervisory stress test
results from two or more periodic analyses of a covered
company, the covered company's stress capital buffer
requirement on the basis of supervisory stress test results
from two or more periodic analyses of that covered company.
(b) Changes.--The Board may only make material changes to the
methodologies established in the rule issued under subsection (a)(1)
through notice and comment rulemaking.
(c) No Double-count.--The Board shall ensure no double-count of
capital requirements for the same risks in the stress capital buffer
requirement and the risk-based capital requirements.
(d) Definitions.--In this section:
(1) Covered company.--The term ``covered company'' means a
company to which section 225.8 of title 12, Code of Federal
Regulations, or section 238.170 of title 12, Code of Federal
Regulations, applies.
(2) Stress capital buffer requirement.--The term ``stress
capital buffer requirement'' has the meaning given that term
under--
(A) section 225.8(d) of title 12, Code of Federal
Regulations; and
(B) section 238.170(d) of title 12, Code of Federal
Regulations.
(e) Rule of Construction.--Nothing in this section may be construed
to imply that the Board is required to establish a stress capital
buffer requirement for any bank holding company or any other company
regulated by the Board.
SEC. 3. RULEMAKING RELATING TO STRESS TESTING.
(a) In General.--Beginning in the first calendar year beginning after
the date of the enactment of this section, the Board shall, not less
than 60 days before conducting a stress test pursuant to section 165(i)
of the Financial Stability Act of 2010, publicly disclose each scenario
to be used in such stress test.
(b) Prohibition.--The Board may not, by rule or otherwise, subject
any nonbank financial company or bank holding company to a climate-
related stress test using the authority provided in section 165(i) of
the Financial Stability Act of 2010.
SEC. 4. GAO REPORT.
(a) In General.--The Comptroller General of the United States shall,
every 3 years, conduct a study and submit a report to the Congress with
respect to the stress tests conducted by the Board under section 165(i)
of the Financial Stability Act of 2010 in the 3 most recent calendar
years.
(b) Contents.--The report submitted to the Congress under subsection
(a) shall consider the effectiveness of the stress tests in
evaluating--
(1) the safety and soundness of the nonbank financial
companies and bank holding companies subjected to stress tests;
and
(2) the stability of the United States financial system.
PURPOSE AND SUMMARY
H.R. 5270, the Stress Testing Accountability and
Transparency Act was introduced on September 10, 2025, by
Republican Representative Bill Huizenga (MI-04). This bill
requires the Federal Reserve Board (FRB) to issue regulations
to establish the models, assumptions, and scenarios used in
annual stress tests that serve as the basis for covered banking
organizations' stress capital buffer (SCB) requirements. It
also prohibits climate-related stress tests for nonbank
financial companies and directs the Government Accountability
Office (GAO) to report every three years on the effectiveness
of stress testing in assessing the safety and soundness of
institutions subjected to stress tests and the stability of the
U.S. financial system.
BACKGROUND AND NEED FOR LEGISLATION
Section 165 of the Dodd-Frank Act requires the FRB to
conduct stress tests of certain bank holding companies to
determine whether they have ``the capital, on a total
consolidated basis, necessary to absorb losses as a result of
adverse economic conditions.''\1\ Under the current
regulations, category I, II, and III firms are subject to
annual stress testing, and category IV firms are subject to
biennial stress testing. Certain intermediate holding companies
of foreign banking organizations are also subject to the stress
testing requirements. The FRB uses supervisory financial data
to subject each covered firm to a severely adverse scenario,
which is characterized by a severe global recession. This test
is intended to evaluate the financial resilience of the covered
firms by estimating their losses, revenues, expenses, and
resulting capital levels under the hypothetical scenario. If a
firm fails to maintain a SCB, it is subject to automatic
restrictions on capital distributions, including limitations on
dividends to shareholders, share repurchases, and executive
compensation.
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\1\12 U.S.C. Sec. 5365.
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Each model used by the FRB is a mathematical formula
derived from statistical models, yet these models are not
publicly disclosed or issued for public comment by rulemaking.
Most concerning, last year's Basel III Endgame proposal
included considerably higher capital requirements for
operational and market risk, which FRB Governor Waller stated
has already been captured by stress testing for the past
decade. If Basel III had been finalized as proposed, banks
would be required to hold more capital than is necessary to
safeguard against even significant economic and/or market
downturns.
The FRB issued a proposal earlier this year to reduce the
volatility of stress test capital requirements and indicated
they are planning to issue an additional proposal later this
year on models and scenarios used to determine the hypothetical
losses and revenues of banks under stress. This legislation
directs the FRB to issue regulations that are consistent with
those changes.
COMMITTEE CONSIDERATION
119TH CONGRESS
On September 10, 2025, Representative Huizenga introduced
H.R. 5270, the Stress Testing Accountability and Transparency
Act, with Representative Andy Barr (R-KY) as original
cosponsor. Representative Pete Sessions (R-TX) was added
subsequently as a cosponsor. The bill was referred solely to
the Committee on Financial Services.
This bill was attached to the May 14, 2025, hearing titled
``Enhancing Competition: Shaping the Future of Bank Mergers and
De Novo Formation.''
On September 16, 2025, the Committee on Financial Services
met in open session to consider, among others, H.R. 5270. The
Committee ordered H.R. 5270, as amended, to be favorably
reported to the House of Representatives.
118TH CONGRESS
On May 8, 2024, Representative Barr introduced H.R. 8287,
the Stress Testing Accountability and Transparency Act. The
bill was referred solely to the Committee on Financial
Services.
A draft version of the bill was attached to the May 15,
2024, hearing titled, ``Oversight of Prudential Regulators.''
Provisions of H.R. 8287 were included as a title in H.R. 8337,
the Bank Resilience and Regulatory Improvement Act, introduced
by Representative Barr on May 10, 2024, which was ordered to be
reported favorably by the Committee on May 16, 2024 by a vote
of 24 yeas and 22 nays. On December 3, 2024, the Committee
filed H. Rept. 118-788 to accompany H.R. 8337. There was no
further action on H.R. 8337 in the 118th Congress.
RELATED HEARINGS
Pursuant to clause 3(c)(6) of rule XIII of the Rules of the
House of Representatives, the following hearing was used to
develop H.R. 5270:
The Subcommittee on Financial Institutions held a May 14.
2025, hearing titled, ``Enhancing Competition: Shaping the
Future of Bank Mergers and De Novo Formation.'' A discussion
draft version of the bill was attached to the hearing. The
Subcommittee heard testimony from the following witnesses: Mr.
Keith Costello, President and CEO, Locality Bank; Ms. Mary
Usategui, President and CEO, BankMiami; Ms. Amanda Allexon,
Partner, Simpson Thacher & Bartlett LLP; Mr. John Berlau,
Senior Fellow and Director of Finance Policy, Competitive
Enterprise Institute; and Mrs. ReShonda Young, Founder, Jabez
Inc.
COMMITTEE VOTES
Clause 3(b) of rule XIII of the Rules of the House of
Representatives requires the Committee Report to include record
votes on the motion to report legislation and amendments
thereto.
On September 16, 2025, the Committee ordered H.R. 5270, as
amended, to be reported favorably to the House by a recorded
vote of 28 yeas and 24 nays, a quorum being present. (Record
Vote No. FC-206).
The Committee considered the following amendments to H.R.
5270:
Representative Huizenga offered an amendment
in the nature of a substitute, designated HUIZEN_043,
which made minor edits and technical changes. This
amendment was adopted by a voice vote.
Representative Sean Casten (D-IL) offered an
amendment (No. 4), designated CASTEN_072. The amendment
would strike the underlying bill's prohibition on the
Federal Reserve's ability to subject a nonbank
financial company or bank holding company to a climate-
related stress test. This amendment failed by a
recorded vote of 24 yeas and 28 nays, a quorum being
present. (Record Vote No. FC-204).
Representative Maxine Waters (D-CA) offered
an amendment (No. 5), designated WATERS_096. The
amendment would prohibit the provisions of the
underlying bill from taking effect until a Federal
court determines that the President has attempted to
unlawfully remove a governor of the Board of Governors
of the Federal Reserve System. This amendment failed by
a recorded vote of 24 yeas and 28 nays, a quorum being
present. (Record Vote No. FC-205).
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COMMITTEE OVERSIGHT FINDINGS
Pursuant to clause 3(c) of rule XIII of the Rules of the
House of Representatives, the findings and recommendations of
the Committee, based on oversight activities under clause
2(b)(1) of rule X of the Rules of the House of Representatives
are incorporated in the descriptive portions of this report.
PERFORMANCE GOALS AND OBJECTIVES
Pursuant to clause 3(c)(4) of rule XIII of the Rules of the
House of Representatives, the goal of H.R. 5270 is to increase
transparency and accountability of the FRB's stress testing
regime by requiring the FRB to publicly disclose, through
notice and comment, the models, assumptions, and methodologies
that are used to conduct stress tests.
COMMITTEE COST ESTIMATE
Clause 3(d)(1) of rule XIII of the Rules of the House of
Representatives requires an estimate and a comparison of the
costs that would be incurred in carrying out H.R. 5270. The
Committee has requested but not received a cost estimate from
the Director of the Congressional Budget Office. However,
pursuant to clause 3(d)(1) of rule XIII of the Rules of the
House of Representatives, the Committee will adopt as its own
the cost estimate by the Director of the Congressional Budget
Office once it has been prepared.
NEW BUDGET AUTHORITY AND CBO COST ESTIMATE
With respect to the requirements of clause 3(c)(2) of rule
XIII of the Rules of the House of Representatives and section
308(a) of the Congressional Budget Act of 1974 and with respect
to requirements of clause 3(c)(3) of rule XIII of the Rules of
the House of Representatives and section 402 of the
Congressional Budget Act of 1974, the Committee will adopt as
its own the cost estimate for the bill prepared by the Director
of the Congressional Budget Office. However, a cost estimate
was not made available to the Committee in time for the filing
of this report. The Chairman of the Committee shall cause such
estimate to be printed in the Congressional Record upon its
receipt by the Committee.
UNFUNDED MANDATES STATEMENT
The Committee has requested but not received from the
Director of the Congressional Budget Office an estimate of the
Federal mandates pursuant to section 423 of the Unfunded
Mandates Reform Act. The Chairman of the Committee shall cause
such estimate to be printed in the Congressional Record upon
its receipt by the Committee.
EARMARK STATEMENT
In compliance with clause 9 of rule XXI of the Rules of the
House of Representatives, this bill, as reported, contains no
congressional earmarks, limited tax benefits, or limited tariff
benefits as defined in clause 9(e), 9(f), or 9(g) of rule XXI.
FEDERAL ADVISORY COMMITTEE ACT STATEMENT
No advisory committees within the meaning of section 5(b)
of the Federal Advisory Committee Act were created by this
legislation.
APPLICABILITY TO THE LEGISLATIVE BRANCH
The Committee finds that the legislation does not relate to
the terms and conditions of employment or access to public
services or accommodations within the meaning of section
102(b)(3) of the Congressional Accountability Act.
DUPLICATION OF FEDERAL PROGRAMS
Pursuant to clause 3(c)(5) of rule XIII of the Rules of the
House of Representatives, the Committee states that no
provision of the bill establishes or reauthorizes a program of
the Federal Government known to be duplicative of another
Federal program, including any program that was included in a
report to Congress pursuant to section 21 of the Public Law
111-139 or the most recent Catalog of Federal Domestic
Assistance.
SECTION-BY-SECTION ANALYSIS OF THE LEGISLATION
Section 1. Short title
Section 1 provides the short title is the ``Stress Testing
Accountability and Transparency Act''.
Section 2. Rulemakings related to stress capital buffer requirements
Section 2 requires the FRB, within 90 days of enactment of
this Act, to issue a rule establishing the models, assumptions,
formulas, and other methodologies that are used to conduct
stress tests. This includes any such test that is used to
determine any component or subcomponent of the stress capital
buffer of an institution. Additionally, the rule shall require
the FRB to establish a stress capital buffer based on two or
more periodic analyses of a covered company as opposed to one.
This section clarifies that the FRB may only make material
changes to the methodologies established in the rule through
notice and comment rulemaking. This section requires the FRB to
ensure no double-counting of capital requirements for the same
risks in the stress capital buffer requirement and the risk-
based capital requirements. This section clarifies that nothing
in this section may be construed to imply that the FRB is
required to establish a stress capital buffer requirement for
any bank holding company.
Section 3. Rulemaking relating to stress testing
Section 3 requires the FRB to publicly disclose each
scenario to be used in such tests 60 days before conducting a
stress test, beginning in the first calendar year after the
date of enactment of this Act. This section prohibits the FRB
from subjecting any nonbank financial company or bank holding
company to a climate-related stress test.
Section 4. GAO report
Section 4 requires the Comptroller General of the U.S. to
conduct a study every three years, and submit a report to
Congress, on the effectiveness of the stress tests in
evaluating the safety and soundness of the nonbank financial
companies and bank holding companies subjected to stress tests
and the stability of the U.S. financial system.
CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED
H.R. 5270 does not repeal or amend any section of a
statute. Therefore, the Office of Legislative Counsel did not
prepare the report required under clause 3(e) of rule XIII of
the House of Representatives.
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MINORITY VIEWS
H.R. 5270 would undermine stress testing of the largest
banks, a key reform imposed following the 2008 global financial
crisis that was used successfully to strengthen the safety and
soundness of the banking system. Specifically, the bill
requires the Federal Reserve (Fed) to subject the stress
capital buffer calculations and stress testing scenarios to
public rulemaking. Experts have warned this would undermine the
purpose of the stress tests and allow large banks to game them.
This bill also includes a GAO study that would be conducted
every three years to review the economic scenarios the Fed is
using for its stress tests. The bill further prohibits the Fed
from conducting climate-related financial risk stress tests,
preventing them from addressing a rising risk that is affecting
the financial system.
Wall Street banks were severely undercapitalized in the
lead up to the 2008 financial crisis.\1\ They funded their
loans and risky bets with too much debt and not enough of their
own capital. Stress testing was a key tool that regulators
deployed to restore public and market confidence in the
financial system in the wake of the crisis. In 2009, regulators
conducted stress tests to examine whether big banks could
withstand continued economic weakness without breaching their
minimum capital requirements.\2\ Due to the success of this
stress test, Congress required annual stress tests of the
nation's largest bank holding companies and systemically
important financial institutions (``SIFIs'').\3\ The Federal
Reserve implemented this requirement by creating the Dodd-Frank
Act Stress Test (``DFAST'') and the Comprehensive Capital
Analysis and Review (``CCAR'').\4\ Through DFAST and CCAR, big
bank balance sheets were stressed annually against a severe
hypothetical economic downturn. If the projected losses brought
a big bank's capital levels below regulatory minimums, it would
face restrictions on its planned dividends and share buybacks.
The stress testing framework, and other post crisis
improvements to capital requirements helped increase big bank
capital levels in the years following the financial crisis.\5\
Experts have also noted that the U.S. post-crisis approach to
stress testing and improving other prudential requirements
strengthened the largest U.S. banks more so than their European
counterparts, which faced a relatively weaker stress testing
approach.\6\
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\1\Financial Crisis Inquiry Commission. The financial crisis
inquiry report: final report of the National Commission on the Causes
of the Financial and Economic Crisis in the United States (Jan. 2011).
\2\Treasury, Data: Supervisory Capital Assessment Program & Capital
Assistance Program (SCAP and CAP) (accessed Sep. 14, 2025).
\3\Dodd-Frank Wall Street Reform and Consumer Protection Act,
Section 165(i)(1). Distinct from the supervisory stress tests, the
Dodd-Frank Act also established a company-run stress testing
requirement.
\4\DFAST and CCAR were ultimately merged, and stress testing
results were more formally integrated into the point- in-time capital
requirements through the Stress Capital Buffer rulemaking. See, Fed,
Federal Reserve Board approves rule to simplify its capital rules for
large banks, preserving the strong capital requirements already in
place (Mar. 4, 2020).
\5\For example, the 34 large bank holding companies subjected to
the 2017 stress tests had more than doubled their high-quality risk-
weighted capital levels from 5.5% in Q1 2009 to 12.5% in Q1 2017.
Similarly, these banks materially increased their simpler and more
reliable leverage capital levels between 2009 and 2017. Fed, ``Federal
Reserve releases results of CCAR (Jun. 28, 2017); Federal Reserve Bank
of Kansas City, Bank Capital Analysis Semiannual Update (Oct. 2024).
\6\For example, see, Bloomberg, U.S. Banks Safer Than Europeans Due
to Early Medicine, Cohn Says (Feb. 9, 2016); Viral V. Acharya and
Sascha Steffen, Falling short of expectations? Stress-testing the
European banking system (Jan. 15, 2014); Robert A. Weigand, A tale of
two banking systems: the performance of U.S. and European banks in the
21st century (Apr. 7, 2015).
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But during the first Trump administration, the Fed watered
down certain assumptions and requirements embedded in the
stress testing framework.\7\ For example, leverage capital
requirements were stripped from the stress tests, certain
assumptions regarding balance sheet growth were relaxed, and
pre-funding requirements for planned dividends and share
buybacks were significantly reduced.\8\ In addition to relaxing
certain stress testing assumptions and requirements, the Fed
finalized a series of ``transparency'' amendments prompted by
industry requests.\9\
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\7\Fed, Federal Reserve Board approves rule to simplify its capital
rules for large banks, preserving the strong capital requirements
already in place (Mar. 4, 2024); Fed, Federal Reserve Board announces
it will limit the use of the ``qualitative objection'' in its CCAR
exercise, effective for the 2019 cycle (Mar. 6, 2019); Better Markets.
Comment Letter Re: Amendments to the Regulatory Capital, Capital Plan,
and Stress Test Rules (June 25, 2018).
\8\Id.
\9\Fed, Federal Reserve Board finalizes set of changes that will
increase the transparency of its stress testing program for nation's
largest and most complex banks (Feb. 5, 2019); The Clearing House, The
Clearing House Offers Recommendations to Improve Stress Testing
Transparency (Jan. 22, 2018).
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In June 2024, Greg Feldberg, Research Director of Yale's
Program on Financial Stability testified before the House
Financial Services Committee and raised concerns about this,
saying that, ``Too much transparency can be a bad thing . . . .
U.S. supervisors are already revealing a lot about the stress
test methodologies to the regulated industry, which may allow
banks to merely optimize to the stress test rather than build
resiliency. The Federal Reserve's disclosures about its models
and methods, along with the Bank of England's, are far more
transparent than other authorities across the world.''\10\
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\10\Greg Feldberg, Written Testimony before FSC FI Subcommittee
hearing, Stress Testing: What's Inside the Black Box? (Jun. 26, 2024).
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In Trump's second term, the Fed is moving forward with
proposals to roll back the stress testing regime further. In
response to these proposed roll backs, Fed Governor Barr warned
that ``banks are likely to game the capital requirements once
they know the details of the stress test'' and that ``[f]ull
disclosure of the Fed's stress models and scenarios could
enable banks to optimize stress test results by adjusting their
balance sheet based on their knowledge of where the models
underprice risk, in order to reduce their capital requirements
without materially reducing risks.''\11\
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\11\Fed, Statement on Stress Test Proposal by Governor Michael S.
Barr (Apr. 17, 2025).
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While periodic GAO studies included in the bill might be
helpful, forcing the Fed to publicize key details regarding
stress testing and subjecting them to rulemakings would allow
banks to game the stress tests, undermining the intent to
ensure they improve preparedness for unexpected events.
Moreover, preventing the Fed from conducting climate-related
stress tests will blind our regulators from dealing with a
financial stability risk that could have costly ramifications.
This measure was included in a larger bank deregulation
package, H.R. 8337 (118th), that Republicans advanced on a
party-line vote last Congress.
H.R. 5270 was opposed by all Committee Democrats in the
markup. The bill is also opposed by Americans for Financial
Reform and Public Citizen. During debate, Republicans rejected
an amendment from Rep. Casten that would have eliminated the
bill's provisions prohibiting the Fed from conducting climate-
related stress tests in the future. Republicans also rejected
an amendment from Ranking Member Waters that would promote the
independence of the Federal Reserve by stipulating that the
bill will take effect January 2029 but will not take effect if
a Federal court finds, before that time, that the President
attempted to unlawfully fire a Fed Governor.
For these reasons, we oppose H.R. 5270.
Sincerely,
Maxine Waters,
Ranking Member.
Nydia M. Velazquez,
Stephen F. Lynch,
Al Green,
Joyce Beatty,
Rashida Tlaib,
Sylvia R. Garcia,
Members of Congress.
[all]