Fed Finalizes Stress Test Overhaul, Averaging Two Years of Results for the SCB
The Fed's September 30, 2026 final rules make the stress capital buffer a two-year average, move its effective date to January 1, and add annual public comment on material model changes.
On September 30, 2026 the Federal Reserve approved two final rules, published October 2 in the Federal Register, 6–1 with Governor Barr dissenting. The Volatility Rule sets each firm's stress capital buffer using the average stress capital decline projected in the two most recent supervisory stress tests, with the first averaged SCB effective January 1, 2029 and based on 2027 and 2028 results. The SCB effective date moves from October 1 of the announcement year to January 1 of the next year, the dividend add-on shifts to quarters five through eight, and averaging generally will not apply to biennial Category IV firms or after a material-change recalculation.
The Transparency and Public Accountability Rule keeps the December 31 jump-off date but requires annual public comment on scenarios and on "material" model changes — those capable of shifting a firm's projected post-stress CET1 ratio by 20 bps or more, or the cross-firm average by 10 bps or more. Models must be disclosed by May 15; results use the greater loss under two Global Market Shock scenarios; and the reconsideration window moves to 15 business days.
The Board estimates roughly 1% lower aggregate SCBs versus prior three years and about half the volatility. Comments on the 2027 models notice are due December 1, 2026.