CCAR and DFAST are annual stress tests that financial institutions must conduct to assess whether they would remain well capitalized during economic downturns. CCAR applies to banks with over $50B in assets, while DFAST applies to banks between $10-50B. Both tests involve multiple economic scenarios developed by the Federal Reserve and require companies to submit capital plans and projections to regulators. The tests aim to ensure banks maintain sufficient capital buffers to continue operations during a crisis and promote financial stability.

1. COMPARATIVE METHOD: CCAR versus DFAST
Acronym CCAR-Comprehensive Capital Analysisand Review DFAST-Dodd Frank Act Stress Test
Birth Year November 2011 July 2010
Parents Adopted by Congressman Frank Barney and Senator
Christopher Dodd
Hon Frank Barney and Hon Christopher Dodd
Target Goal Ensure that financial firms aresufficiently capitalized
to absorb losses duringfinancial crisiswhilemeeting
obligations to creditors and counterparties and
continuingto be ableto lend to households and
businesses.
Process:
 BoD and senior Management review and
approve the disclosureof the test results
 BHCs submittests results to the regulator
 Federal Reserve supervisorsreviewthe capital
planningprocess. Expectations vary by sizeand
complexity
 Federal Reserve runs DFA supervisory stress test
with BHCs planned capital actions. BHCs must
meet all applicableminimumcapital ratios
 BHCs made this stand-alonedisclosurepublicly
availableon their website within 15 days
 Fed Is required to discloseannually summary of
its supervisory stress testresults by June 30
Is a forward lookingquantitativeevaluation of the
impactof stressful economic and market conditions
on bank capital
Process:
 Mid-sizeBHCs arenot subjectto supervisor stress
test
Purpose  Promote ability for largestBHCs to recover very
quickly fromany financial crisis
 Providefor a comprehensive supervisory
assessmentof capital needed for any
reputational and operational risk prevention of a
potential market and financial crisis
 Conduct post stress assessmentof firms’capital
distribution plans
 Require largeBHC to implement strongoversight
and practices to supportcapital planningand to
consider severely adverse outcomes when
internally assessingtheir capital needs
 Provideto company management, board of
directors,the investingpublic and Fed supervisors
capital ratiosindicatinghowthe firmmight
change under hypothetical set of stressful
economic scenarios developed by the Federal
Reserve Board
Stakeholders Regulators Wants more data and scenarios whileknowingthe
risk of exposure of each bank
Wants more data and scenarios whileknowingthe risk
exposure of each bank
Financial
Institution
Wants to provide less data and scenarios and keep
the report classified w/ confidential stamp
Wants to provide less data and scenarios and keep the
report classified w/ confidential stamp
Investing
Public
Wants the results of tests with fail or pass status
published for its use
Wants the results of tests with fail or pass status
published for its use
Scope Consists of a quantitativeassessmentfor All Banks
HoldingCompanies with total consolidated assets of
over $50 billion and a qualitativeassessmentfor
BHCs that are LISCC or largeand complex firms.
Large and non-complex firms arestill required to
demonstrate an ability to meet their minimum
capital requirements under stress as partof CCAR’s
quantitativeassessmentand will continueto be
subjectto regular supervisory assessments that
examine their capital planningpractices.
 Quantitativeassessmenthelps to ensure that
firms maintain sufficientcapital to continue
operations throughout times of economic and
financial marketstress. The qualitative
assessmentseeks to ensure that firms have
Under Dodd Frank Act , All financial and banking
institutions with total consolidated assets with more
than $10 Billion thataresupervised by a primary
federal financial regulatory agency arerequired to
conduct an annual company run stress test. However
covered financial firms, defined as BHCs, U.S. IHCs or
nonbank financial firms with averagetotal
consolidated assets of $50 billion or more, aresubject
to the additional mid-cyclestress testand the
supervisory stress test(reference, 12CRF 252.52(g))
 Forward lookingplanninghorizon of a least nine
quarters

2. strong practices for assessingtheir capital needs
through identification,measurement, control
and effective oversight.
 Threshold is calculated usingtheaverage of the
total consolidated assets as reported on a bank
organization’s four mostrecent regulatory
reports
 Large and complex firms areBHCs or US
intermediate holding(IHC) that (1) have average
total consolidated assets of $250 billion or more,
or (2) have average total nonbank assets of $75
billion or more, and (3) arenot largeinstitution
supervision coordinatingcommittee (LISCC)
 Large and non-complex firms areBHCs or U.S.
IHC that (1) have average total consolidated
assets of $50 billion or more, but less than $250
billion (2) haveaverage total nonbank assets of
less than $75 billion,and (3) arenot U.S. global
systematically importantbanks
Stress Conductors Both Federal Reserve and the company arerequired
to conductseparated tests. Fed also publishes policy
statement on all the details of the scenarios,post
stress capital ratios and description of all models.
Both Federal Reserve and Company conduct separated
tests
Stress Scenarios For Annual Stress Test
3 supervisory scenarios
 Baseline
 Adverse
 Severely Adverse
2 internally generated scenarios
 BHC Baseline
 BHC Adverse
 For Mid Cycle Company run stress test
o 3 internally developed scenarios
 Baseline
 Adverse
 Severely adverse
 PS: only CCAR participantsthatmeans firms with
consolidated assets of $50 billion or more, are
subject to both annual and mid cycle disclosure.
 For Annual Stress test
o For Fed (3 supervisory scenarios)
 Baseline
 Adverse
 Severely adverse
o Form Company run (3 supervisory
scenarios)
 Baseline
 Adverse
 Severely adverse
 PS: covered firms are not required to define their
own scenarios
Stress Test Exercises  Annual supervisory and company run test
 Mid cycle company run stress testing
 Annual supervisory/company run and mid cycle
company run stress testing
 Annual company run stress testing for DFAST only
participants(firms with total consolidated assets
between $10 billion and $50 billion)
Use of 3rd Party Vendors It is allowed to use them to assistin thedevelopment
of variables based on scenarios and ratioscollected.
In addition,itcan use 3rd party products.
It is allowed to use them to assistin thedevelopment
of variables based on scenarios and ratioscollected in
addition;Itcan use3rd party products.
Capital Action
Assumptions
 BHC to present a capital action plan that
describes all planned capital actions over a 9
quarter planninghorizon
 Supported with BHCs internal process for
assessingcapital adequacy and also policies
governing capital actions
 BHCs specific planned capital actionsto stay as
expected
 Large BHC must submitannual capital plans to
Federal Reserve
 A standardized setof capital action assumption
specified in the DFAST rules
 Common stock dividend payments are assumed to
continue at the same dollar amountas the
average of the prior four quarters (Q2 2016-Q1 2-
17) and includecommon stock dividends
attributable to employee compensation
 Scheduled dividend,interest, or principal
payments for other capital instruments are
assumed to be paid

3. o Subject to FR approval of results,capital
plan and capital actions
o Must maintain > 5% post stress Tier 1
Common ratio
o Must use both supervisory and BHC
specific stress testscenarios
 Repurchases of common stock and redemptions
of other capital instruments areassumed to zero
 Issuances of new preferred, or common stock
other than issuances of common stock related to
employee compensation are assumed to zero.
 Mid size firms areonly required to use
supervisory scenariosin Dodd Frank company run
stress tests
Loss estimation  CCAR participants mustprovide
o More granular lossestimation
expectations usingFR Y14-A
segmentation,
o Identify key loss drivers,and
o Indicatehow the scenarios affectthose
drivers and losses
 DFAST only participantsmay chooseto base their
stress losses on industry historical loss experience,
and
 May be ableto estimate creditlosses on an
aggregate level (top-down approach) usingFR 16
segmentation
Operational Losses  CCAR participants mustprovide
o operational lossestimates
 DFAST only firms must provide
o Includeaggregate operational losses in
Pre-Provision Net Revenue (top-down
approach) usingFR Y-16 segmentation
PPNR  CCAR participants mustprovide
o Granular estimation approach
o Identify specific driversof revenue and
expenses and analyzehow supervisory
scenarios affectthose drivers
 DFAST only firms must provide
o Less granular approach
o Can projectat an aggregate, company
wide level and may be based on industry
experience
o Project PPNR based on 3 main
components (net income, noninterest
income and noninterest expense)
Balance sheet and risk
weighted assets
 CCAR participants mustproviderisk weighted
assets data for each major segment of the
balancesheet for Y 14A
 DFAST only firms may use a simple,constant
method for projectingfull balancesheet and risk
weighted assets
Governance, Policies &
Controls
 Top Management under the leadership of the
CEO must design,request the BoD authorization
and implement all thesystem of controls
includingthis test. It hires any external
consultingstaff for its execution. It chooses
ratios and describes thepractices. Ithas a duty
to document this process and test. It is vested
with the power to comply with regulation
 BoD must review, ask questions and approve
minutes with these tests policies,plan of action
and results.It shares some contributory causes
of non-compliancewith these rules.
 Risk Committee, BoD
o Must have formal charter
o Must receive and review report
o Must report directly to the BoD
o Must meet a leastquarterly or more
o Chaired by an independent director
o Reference, 12 CFR 252.33
 Chief Risk Officer
o Responsiblefor the management of
deficiencies
o Must establish risk limits
o Must implement on going compliance
 PS: all applied to CCAR participantsonly
 Top Management under the leadership of the CEO
must design, request the BoD authorization and
implement all the system of controls includingthis
test. It hires any external consultingstaff for its
execution. It chooses ratios and describes the
practices. Ithas a duty to document this process
and test. Itis vested with the power to comply
with the regulation.
 BoD must review, ask questions and approve
minutes with these test policies,plan of action
and results. It shares some contributory causes of
non-compliancewith these rules.
 Risk Committee, BoD
o Approves and periodically reviews the
risk management policies of its global
operations and oversees the operations
of its global risk management
o Must have one member with experience
in identifying,assessing,and managing
risk exposures
o Must be chaired by an independent
directors
 Reference, 12 CFR 252.22
Use of Stress
Test Results
Fed
Reserve
Fed will analyzethe quality of the process and results
for the company. It will also consider these results
when evaluatingproposed actions thatimpact the
Uses this test to analyzeand determine whether
financial institutionssubjectto these tests have
adequate capital to continueto operate through

4. firmcapital to promote a safe, sound bankingand
financial systemthat supports the growth and
stability of the US economy. If Fed objects to a firm’s
capital plan,the firmmay only make capital
distributions (sizeof the dividend) that the Fed has
not objected to in writing.
difficulttimes of economics or financial crisis based on
9 quarters forecast. If Fed objects to a form’s capital
plan,the firmmay only make capital distributions that
the Fed has not objected to in writing
Company BoD and top management must consider these
results in the company strategies related to capital
planning,assessmentof capital adequacy,risk
management and FD (fair disclosure). Management
must implement the documentation of these results
and their process.
BoD and Top Management must consider these results
in the company strategies related to capital adequacy,
risk management and FD (fair Disclosure).
Management must implement the documentation of
these results and their process
Projections  Distribution of scenarios for annual stress test:
Fed releases economic and financial market
scenarios thatareused in the annual company
and supervisory run stress tests under the Dodd
Frank Act no later than February 15. Each
scenario (baseline,adverseand severely
adverse) includes economic variablesincluding
macroeconomic activity,unemployment,
exchange rates, prices,incomes and interest
rates. The lastscenariosarenotforecasts
 Covered firms arerequired to complete
templates (quantitativeprojections of balance
sheet, capital losses,and incomes acrossor
more macroeconomic scenarios) usingfinancial
information as of December 31 each year.
 Distribution of scenarios for annual stress test:
Fed releases economic and financial market
scenarios thatareused in the annual company
run stress test under the Dodd Frank Act no later
than February 15. Each scenario (baseline,
adverse, and severely adverse) includes economic
variablesincludingmacroeconomic activity,
unemployment, exchange rates, prices,incomes
and interest rates.The lastscenarios arenot
forecasts
 Covered firms arerequired to complete templates
(quantitativeprojections of balancesheet, capital
losses and incomes acrossor more
macroeconomic scenarios) usingfinancial
information as of December 31 each year.
Data Source  Proxy data, FR Y14A and others
 Fed Reserve web site(release of all relevant
details of the scenarios,publication of the policy
statement, publication of description of all the
models, published poststress ratios,…)
 Bank databasefor historical data (in absence of
it a comparabledata can be used after a good
research)
 Other banks websites for posted disclosures
 Proxy data, FR Y16, Call Reportand FR Y 9C report
 Fed Reserve web site(release of all relevant
details of the scenarios,publication of the policy
statement, publication of description of all the
models, published poststress ratios,…)
 Bank databasefor historical data (in absenceof it
a comparabledata can be sued after a good
research)
 Other banks websites for posted disclosures
Disclosure
Requi-
rements
Reporting
Frequency
 Annually,submitby April 5 and Mid cyclesubmit
by October 5 unless that time is extended by the
Board in writing (reference; 12 CFR 252.16
(a)(3)(i))
o Public disclosure, June15 to July 15 and
October 5 to November 4 (but within
15 days after the Board discloses the
results of supervisory stress tests,
reference; 12CFR 252.17(a)(2)(i))
o Report filed on Form FR Y14A
o Approximately 2500 lineitems per
scenario for annual and 1900 for Mid
cyclesubmission
 $10 billion <x>$50 billion Reportingof Annually:
submission by July 5 unless thattime is extended
by the Board in writing(reference; 12 CFR
252.16(a)(3)(ii))
o Public disclosure,October 15 to October
31
o Report filed on form FR Y16
o Summary report with approximately 100
lineitems per scenario
Location  Must be disclosed as a stand-alonedisclosure  Must be a stand-alonedisclosure
Content of
Submission
 Annual Submission by CCAR participants
o Requirements for the Test
o Description of the test Severely adverse
scenario
o Key risks captured
o Forecastmethodologies
o Company run Test
 Mid Cycle Submission by CCAR participants
 Annual Submission by DFAST only
o Description of methods
o Summary of results
 Material riskscaptured in the
stress tests
o Description of types of risks

5. o Requirements for Mid cycleTest
o Description of the company run
severely adverse scenario
o Company run test
o Key risks capturein stress test
o Forecastmethodologies, company run
severely adverse scenario
Interaction
w/
Securities
Law
 Quiet periods is required
 Large BHCs also furnish a Form8-K to the SEC
o Disclosureof the changes in regulatory
capital ratios
 Quiet period is required duringdisclosureperiod
Proposed Changes  The threshold in Section 165 of Dodd-Frank for
enhanced prudential standards should beraised
to be better tailored to the complexity of bank
holdingcompanies.
 The threshold for participation for company run
DFAST should be raised to $50 billion in total
assets
 The mid-year DFAST cycleshould be eliminated,
and the number of supervisory scenariosshould
be reduced from three to two (baselineand
severely adverse)
 Banks should determine the appropriatenumber
of models that are sufficientto develop
appropriateoutput results
Regulatory Agencies FRB FRB, OCC, FDIC
Example of disclosed tests
List of BHC Participants  13 firms participatingin the CCAR 2017
qualitativeassessmentwith non objection of the
Fed. Fed did issueone conditional non-
objection to Capital OneFinancial Corporation
 Ally Financial Inc,American Express Co,
BancWest Corp, bank of America Corp, the bank
of NY, BB&T, BBVA, BMO, CIT, Citigroup,Citizens
Financial Corp,Comerica Incorporated,Deutsche
bank Trust Corp, Discover Financial service,Fifth
3rd Bancorp, Goldman Sachs,HSBC North
America Holdings,Huntington Bancshares Inc,JP
Morgan chase,KeyCorp, M&T bank, Morgan
Stanley, MUFG American holdings,Northern
Trust Corp, PNC financial servicesGroup,
Regions Financial Corporation,Santander
Holdings USA, state Street Corp, SunTrust Banks,
TD Group US Holdings,U.S. Bancorp, Wells Fargo
& Co, Zions Bancorporation and OTHER 20 BHCs
 About 130 participants
Reporting References FR Y-14A, FR Y-14M, FR Y-14Q, 2017 A financial
System that Creates Economic Opportunities,Section
165(i) of the Dodd-Frank Act (stress Testing
requirements, Summary instructionsfor LISCC and
largeand Complex Firms published by the Federal
Reserve on February 3, 2017,Federal Reserve
revised framework issued in July 2013
DFAST 14A, (FDIC and OCC) DFAST 10-50, FR Y-16;
2017 Financial Systemthat Creates Economic
Opportunities,Section 165 (j) of the Dodd Frank Act,
Federal Reserve revised Framework issued in July 2013

6. Current Regulatory Tailoring of U.S. Bank Capital (Adapted from Trump Administration Findings and Recommendations)
Applicable Regulations G-SiB Int’l Active
($250+ billion)
Regional ($50-
$250 billion)
Mid Size ($10-
$50+ billion)
Small (<$10
billion)
COMPREHENSIVE CAPITAL ANALYSIS & REVIEW (CCAR)
Global market shock for trading Yes No No No No
Counterparty default scenario Yes No No No No
QualitativeFed run process review Yes Yes No No No
QuantitativeFed run stress tests Yes Yes Yes No No
Fed ability to object to capital plans through CCAR Yes Yes Yes No No
DODD FRANK ACT STRESS (DFAST)
QuantitativeFed run stress tests Yes Yes Yes No No
Company run stress tests Yes Yes Yes Yes No
Annual stress tests Yes Yes Yes Yes No
Mid year stress test Yes Yes Yes No No