Banks are Fed up: In 2010, Congress passed the Dodd-Frank Wall Street Reform and Consumer Protection Act, a major law regulating large financial institutions. The goal of the law was to prevent another financial crisis. Among the law's many provisions was a requirement that the Federal Reserve perform "stress tests" to determine how big banks would perform in another, hypothetical crisis.
But like so many elements of Dodd-Frank, the exact details weren't spelled out. Instead, Congress left others to figure out the particulars. Since then, the Fed has performed capital adequacy analyses as part of the test, and has used those analyses to require banks to maintain certain levels of capital.
