Fed’s NBFI scenario may be more use than CCAR – experts
Main severely adverse scenario does not capture contagion risks from any squeeze on non-banks
The US Federal Reserve’s exploratory scenario focusing on non-bank financial institutions (NBFIs) could be more useful than the main severely adverse scenario in the annual stress-testing exercise, according to risk management experts.
“The Fed has already squeezed as much as it could from the severely adverse scenarios,” says Viktor Tsyrennikov, an independent stress-testing consultant.
“They understand what happens to a bank in a big recession, and you cannot do much more.”
The Fed tinkers with
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