April 20, 2017 / 1:07 PM / 4 months ago

Fed's Powell suggests removing qualitative test from bank stress-testing

Federal Reserve Governor Jerome Powell attends the Federal Reserve Bank of Kansas City's annual Jackson Hole Economic Policy Symposium in Jackson Hole, Wyoming August 28, 2015.Jonathan Crosby

WASHINGTON (Reuters) - Federal Reserve Governor Jerome Powell expressed support Thursday for removing the qualitative standard applied by regulators to regular stress testing of banks.

Powell said that applying a qualitative standard after the financial crisis played a key role in getting banks to understand their risks. But as banks have improved their books after the financial crisis, the need for that part of the regular stress test has lessened.

"We’ve seen a great deal of progress," he said. “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."

Reporting by Pete Schroeder; Editing by Chizu Nomiyama

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