WASHINGTON—The Federal Reserve, along with a coalition of banking and business associations, has asked a federal court to pause ongoing litigation challenging the Fed’s stress testing framework, the ABA Banking Journal reported.
The lawsuit, filed last year in the U.S. District Court for the Southern District of Ohio, was brought by the American Bankers Association, the Bank Policy Institute, the Ohio Bankers League, and other trade groups. The suit contests key elements of the stress testing process the Fed uses to set certain bank capital requirements.
In a joint statement about the request for the pause, the plaintiffs said the Fed is making a good-faith effort to align its stress testing regime with the law and establish transparency and accountability for that process, ABA Banking Journal said.
“A stay of the litigation will allow the Federal Reserve to focus on implementing its commitments through the rulemaking process and delivering a more accurate and reliable framework for the next stress testing cycle,” the plaintiffs said. “We will continue to monitor progress and hope to arrive at an amicable solution that renews trust in this important piece of the regulatory capital framework.”