Just to Clarify

This morning I received this short email from a colleague:

Brad, I’m guessing you’ve seen this:

http://www.fdic.gov/news/news/press/2012/pr12054a.pdf

What they’re saying is, community banks don’t need to run CCAR/SCAP-type tests, but they’re not saying anything about other forms of stress testing, right? What was your take on this?

The press release is a “Statement to Clarify Supervisory Expectations for Stress Testing by Community Banks” from the Fed, FDIC, and OCC.  And that’s correct, they are NOT talking about the additional IRR stress-testing, or liquidity stress-testing, or credit stress-testing.

My take is that this press release is nothing short of a political/defensive move by the regulators to combat the recent noise the ICBA and ABA have been making about the deluge of regulation hurting community banks.  Everyone thinks that all the "new" requirements (which banks are complaining about) are bundled into Dodd-Frank Act…they're not. 

This press release is a gem (for regulators anyway) because they can say, "see? we're not burdening community banks with any of this Dodd-Frank stuff."  But still they can, for instance, continue "enforcing" all the additional stuff "required" by the 2010 IRR Advisory.

It's all buried in the last line of the press release:

"The agencies note that such existing guidance, including that covering interest rate risk management, commercial real estate concentrations, and funding and liquidity management (among others), continues to apply."

Sigh.