Complaint Over Stress Testing Framework

Plaintiffs Bank Policy Institute, Ohio Chamber of Commerce, Ohio Bankers League, American Bankers Association, and Chamber of Commerce of the United States of America allege as follows:

1. This case concerns the annual “stress tests” used by the Board of Governors of the Federal Reserve System (“the Board”) to establish certain bank capital requirements. Plaintiffs do not oppose stress testing or capital requirements, both of which can be instrumental to the safety and soundness of the U.S. financial system. They can also, however, have a great impact on the cost of financial services for all Americans. Federal regulations in an area this consequential should be adopted in a manner that complies with the requirements Congress laid down to ensure fair, rigorous rulemakings and rational results.
2. The current stress-testing process falls short of these requirements. Adopted in se- cret, it produces vacillating and unexplained requirements and restrictions on bank capital. The goal of this suit is to ensure that, going forward, bank capital requirements are established in a transparent manner, with public input, in accordance with the Administrative Procedure Act (“APA”), the Due Process Clause, and the standards our democracy employs to better the law through participation of the public.
3. To be clear, Plaintiffs do not oppose stress-capital buffer requirements or conduct- ing tests to determine those requirements—on the contrary, Plaintiffs support such a buffer and the appropriate use of stress-test results to determine it. Nor do Plaintiffs seek to upend banks’ capital requirements or to disrupt the Board’s application of the stress tests. Instead, Plaintiffs bring this lawsuit to help ensure that beginning in 2026, the Board subjects the components of the stress tests to public notice and comment and complies with other applicable legal requirements.
4. Plaintiffs have long sought to work with the Board to improve the stress-test pro- cess and address its legal deficiencies, and recently, the Board announced its intention to make changes to the existing process. Those announced changes, if finalized, would potentially address some if not all of Plaintiffs’ concerns with the current framework and practices. Plaintiffs applaud the Board’s announcement. However, the deadline for a court challenge to some of the govern- ment actions undergirding the current stress test process is February 2025, and Plaintiffs cannot be certain at this time that the Board’s recently-announced reforms will provide a timely remedy to the harms arising under the current system. Plaintiffs therefore file this suit to preserve their legal rights and to ensure timely reform to the current, flawed process. Plaintiffs intend to work collab- oratively with the Board in its announced rulemakings.

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