Federal Reserve to end pass/fail lending system to financial firms


WASHINGTON—Regulators took steps on Wednesday to dial back scrutiny of big U.S. banks, asset managers and insurance companies, easing policies set up after the financial crisis.

The Federal Reserve said it would end a system of giving pass or fail grades to domestic banks on a portion of their annual stress tests, which measure whether the firms could keep lending during a severe downturn.

Meanwhile, a panel of federal regulators charged with assessing risk to the financial system proposed raising the bar by which it would designate nonbanks such as insurance companies or asset managers to stricter supervision. The Financial Stability Oversight Council said it would aim to review potentially risky activities in business sectors, rather than individual nonbank firms.

An expanded version of this story appears on WSJ.com

Source : MTV