A U.S. District Court has agreed to extend a pause in litigation over the Federal Reserve’s stress testing framework until October 15, 2025. The decision comes after a joint request from both the Federal Reserve and a coalition of industry groups, including the Bank Policy Institute, the American Bankers Association, the U.S. Chamber of Commerce, the Ohio Bankers League, and the Ohio Chamber of Commerce. The original stay was set to expire on August 1.
The extension is intended to give the Federal Reserve more time to fully disclose its stress-test models and begin a formal rulemaking process that will allow public comments on how these tests are conducted in the future.
“The added extension gives the Fed time to fulfill its commitment to a more transparent and rational stress testing framework,” the plaintiffs stated. “Stress testing supports a healthy financial system with robust lending to households and businesses, which makes it necessary to enact these reforms thoughtfully and without undue delay. We remain optimistic that the Federal Reserve will deliver on its promises, and we’ll continue to hold the Fed accountable until it does.”
On April 17, 2025, the Federal Reserve started its first rulemaking effort aimed at reforming stress tests. This initial phase focused on several key changes: averaging stress test results starting with the 2025 cycle; delaying when new capital buffer requirements take effect each year so banks have more time to adapt; and expanding data collection efforts for better modeling of bank net revenues.
Further proposals are expected by September 30. These upcoming revisions are likely to include full disclosure of stress test models with opportunities for public comment, creation of processes for annual feedback on scenarios and future model changes, requests for input on scenario design frameworks, and introduction of objective standards for certain components such as global market shocks and largest counterparty defaults.
The lawsuit brought by these business groups does not dispute using stress testing itself but seeks greater transparency in how such tests are developed and administered by requiring regular rulemaking and public oversight.
The litigation began in December 2024, with an earlier agreement to pause proceedings filed on May 23, 2025.
The Bank Policy Institute represents major U.S. banks as well as foreign banks operating in America. It conducts research on regulatory issues, reviews proposed rules, and addresses matters related to cybersecurity and information security within financial services.