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WASHINGTON (Reuters) - The Federal Reserve could streamline the stress-testing process for banks and might consider making banks submit plans less frequently for how they would handle bankruptcy, Fed Governor Jerome Powell said on Thursday.
Powell said applying so-called qualitative standards in stress tests after the financial crisis played a key role in getting banks to understand their risks. The tests were aimed at assessing whether banks were adequately managing risks.
"We've seen a great deal of progress," Powell told an event for financial firms. "I do think we're getting to the point where qualitative supervision of risk management can no longer be part of the stress test but will return to being part of the normal supervision of firms."
He also said it might be time for the Fed to consider making banks submit so-called living wills every two years, rather than annually as is currently required. The resolution plans outline how a failing bank could handle bankruptcy without requiring a taxpayer bailout.
Separately, Powell said the Fed might ease the regulatory burden it puts on the boards of directors of banks so the boards can focus on banking strategy rather than an "overly detailed checklist of supervisory process requirements."
"We are currently reassessing whether our supervisory expectations for boards need to change," Powell said prepared remarks for an event with financial firms.
Powell, who besides banking regulatory policy also has a vote on the Fed's interest rate decisions, said the U.S. economy appeared to be "at or close to full employment."
Reporting by Pete Schroeder and Jason Lange; Editing by Chizu Nomiyama