FR4202_20240715_omb

Supporting Statement for the
Recordkeeping Provisions Associated with Stress Testing Guidance
(FR 4202; OMB No. 7100-0348)
Summary
The Board of Governors of the Federal Reserve System (Board), under authority
delegated by the Office of Management and Budget (OMB), has extended for three years,
without revision, the Recordkeeping Provisions Associated with Stress Testing Guidance
(FR 4202; OMB No. 7100-0348). The Stress Testing Guidance was issued jointly by the Board,
Federal Deposit Insurance Corporation (FDIC), and Office of the Comptroller of the Currency
(OCC) (collectively, the agencies) on May 17, 2012. The interagency guidance outlines highlevel principles for stress testing practices applicable to all Board-supervised banking
organizations with more than $10 billion in total consolidated assets. Board-supervised banking
organizations include state member banks, bank holding companies, and all other institutions for
which the Board is the primary federal supervisor.
The estimated total annual burden for the FR 4202 is 13,920 hours.
Background and Justification
All banking organizations should have the capacity to understand their risks and the
potential impact of stressful events and circumstances on their financial condition. The U.S.
federal banking agencies have previously highlighted the use of stress testing as a means to
better understand the range of banking organizations’ potential risk exposures. The financial
crisis that occurred between 2007 and 2009 further underscored the need for banking
organizations to incorporate stress testing into their risk management, as banking organizations
unprepared for stressful events and circumstances can suffer acute threats to their financial
condition and viability.
On May 17, 2012, the agencies jointly published the Stress Testing Guidance in the
Federal Register.1 The Stress Testing Guidance outlines high-level principles for firms’ stress
testing practices and highlights the importance of stress testing as an ongoing risk management
practice that supports a banking organization’s forward-looking assessment of its risks.
The guidance is consistent with industry practices and with international supervisory
standards.2 The guidance does not explicitly address the stress testing requirements imposed
upon certain companies by section 165(i) of the Dodd-Frank Wall Street Reform and Consumer
Protection Act of 2010 (Dodd-Frank Act). In October 2012, the Board approved final rules to
implement the stress testing requirements contained in section 165(i) of the Dodd -Frank Act.3
1

77 FR 29458 (May 17, 2012).
See “Principles for Sound Stress Testing Practices and Supervision,” Basel Committee on Banking Supervision,
May 2009, https://www.bis.org/publ/bcbs155.htm .
3 See Annual Company-Run Stress Test Requirements for Banking Organizations With Total Consolidated Assets
Over $10 Billion Other Than Covered Companies, 77 FR 62396 (October 12, 2012) and Supervisory and CompanyRun Stress Test Requirements for Covered Companies, 77 FR 62378 (October 12, 2012).
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The provisions in those final rules are consistent with the principles in the guidance.
Description of Information Collection
The Stress Testing Guidance recommends that banking organizations (1) have a stress
testing framework that includes clearly defined objectives, well-designed scenarios tailored to
the banking organization’s business and risks, well-documented assumptions, conceptually
sound methodologies to assess potential impact on the banking organization’s financial
condition, informative management reports, and recommended actions based on stress test
results and (2) have policies and procedures for a stress testing framework. These voluntary
recordkeeping activities are collections of information under the Paperwork Reduction Act.
An organization should have written policies, annually reviewed and approved by its
board, that direct and govern the implementation of the stress testing framework in a
comprehensive manner. Policies, along with procedures to implement them, should:
• describe the overall purpose of stress testing activities,
• articulate consistent and sufficiently rigorous stress testing practices across the entire
organization,
• indicate stress testing roles and responsibilities, including controls over external
resources used for any part of stress testing (such as vendors and data providers),
• describe the frequency and priority with which stress testing activities should be
conducted,
• indicate how stress test results are used and by whom, and
• be reviewed and updated as necessary to ensure that stress testing practices remain
appropriate and keep up to date with changes in market conditions, organization products
and strategies, organization exposures and activities, the organization’s established risk
appetite, and industry stress testing practices.
Respondent Panel
The FR 4202 panel comprises all Board-supervised banking organizations with more than
$10 billion in total consolidated assets.
Frequency and Time Schedule
The creation and maintenance of the records associated with the FR 4202 are eventgenerated. The documentation associated with the activities described in the Stress Testing
Guidance is maintained by each institution and may be reviewed by Federal Reserve System
examiners.
Public Availability of Data
There are no data related to this information collection available to the public.

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Legal Status
The FR 4202 is authorized pursuant to section 11 of the Federal Reserve Act (12 U.S.C. §
248) (state member banks); sections 25 and 25A of the Federal Reserve Act (12 U.S.C. §§ 602
and 625) (Edge and Agreement corporations); section 5 of the Bank Holding Company Act of
1956 (12 U.S.C. § 1844) (bank holding companies and, in conjunction with section 8 of the
International Banking Act of 1978 (12 U.S.C. § 3106), foreign banking organizations);
section 7(c) of the International Banking Act of 1978 (12 U.S.C. § 3105(c)) (branches and
agencies of foreign banks); section 10 of the Home Owners’ Loan Act (12 U.S.C. § 1467a)
(savings and loan holding companies); and section 165(i) of the Dodd -Frank Act (12 U.S.C. §
5365(i)) (nonbank financial companies supervised by the Board). The information collection
associated with the FR 4202 is voluntary.
Because the collections of information associated with the FR 4202 only involve internal
recordkeeping by firms subject to the Stress Testing Guidance and do not involve the submission
of information to the Board, no issues of confidentiality would normally arise. To the extent that
the Board collects information kept by a banking organization as a record during an examination
of the banking organization, confidential treatment may be afforded to the records under
exemption 8 of the Freedom of Information Act (FOIA), which protects information collected as
part of the Board’s supervisory process (5 U.S.C. § 552(b)(8)). Additionally, individual
respondents may request that certain information collected by the Board during an examination
be afforded confidential treatment pursuant to exemption 4 of FOIA if the information has not
previously been publicly disclosed and the release of the data would likely cause substantial
harm to the competitive position of the respondent (5 U.S.C. § 552(b)(4)).4
Consultation Outside the Agency
The Board consulted with the FDIC and OCC, and confirmed that there will be no
revisions to the guidance at this time.
Public Comments
On February 16, 2024, the Board published an initial notice in the Federal Register (89
FR 12339) requesting public comment for 60 days on the extension, without revision, of the
FR 4202. The comment period for this notice expired on April 16, 2024. The Board did not
receive any comments. The Board adopted the extension, without revision, of the FR 4202 as
originally proposed. On July 1, 2024, the Board published a final notice in the Federal Register
(89 FR 54463).
Estimate of Respondent Burden
As shown in the table below, the estimated total annual burden for the FR 4202 is 13,920
hours. The Board estimates that it takes the approximately 135 Board-supervised institutions
with more than $10 billion in total consolidated assets 40 hours to document the assumptions
used in its stress tests and note the degree of uncertainty that may be incorporated into the tools
4

See 12 CFR 261.17.

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used for stress testing and 40 hours to maintain a summary of test results. In addition to the 135
current institutions, an estimated 12 new institutions crossing over the $10 billion threshold will
take an estimated additional 180 hours to develop the recommended policies and procedures.
Those 12 new institutions will also be subject to the assumption documentation and test
summary requirements, for a total of 260 hours per year. That estimate is based on the average
number of new firms crossing the threshold from 2017 to 2023. The burden estimate was
adjusted down using the standard Board burden calculation methodology after consulting with
the FDIC and OCC. These recordkeeping provisions represent less than 1 percent of the Board’s
total paperwork burden.
Estimated
number of
respondents5

FR 4202
Recordkeeping (Initial)
Recordkeeping (Ongoing)

Estimated
annual
frequency

Estimated
Estimated
average hours annual burden
per response
hours

12

1

260

3,120

135

1

80

10,800

Total

13,920

The estimated total annual cost to the public for the FR 4202 is $972,312.6
Sensitive Questions
This information collection contains no questions of a sensitive nature, as defined by
OMB guidelines.
Estimate of Cost to the Federal Reserve System
The estimated cost to the Federal Reserve System is negligible since the FR 4202 does
not require the Federal Reserve to collect any information.

5

Of these respondents, none are considered small entities as defined by the Small Business Administration (i.e.,
entities with less than $850 million in total assets). Size standards effective March 17, 2023. See
https://www.sba.gov/document/support-table-size-standards.
6 Total cost to the responding public is estimated using the following formula: total burden hours, multiplied by the
cost of staffing, where the cost of staffing is calculated as a percent of time for each occupational group multiplied
by the group’s hourly rate and then summed (30% Office & Administrative Support at $23, 45% Financial
Managers at $84, 15% Lawyers at $85, and 10% Chief Executives at $124). Hourly rates for each occupational
group are the (rounded) mean hourly wages from the Bureau of Labor Statistics (BLS), Occupational Employment
and Wages, May 2023, published April 3, 2024, https://www.bls.gov/news.release/ocwage.t01.htm . Occupations are
defined using the BLS Standard Occupational Classification System, https://www.bls.gov/soc/.

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