Our Take: financial services regulatory update – February 6, 2026

February 06, 2026

Change remains a constant in financial services regulation

Read "our take" on the latest developments and what they mean.

Fed finalizes stress test scenarios; freezes SCBs

What happened? On February 4^th, the Fed:

Finalized its 2026 supervisory stress test scenarios along with a Review of Comments and Summary of Changes explaining how it incorporated public feedback into the final scenarios;
Released a 2026 Supervisory Stress Test Methodology stating that it will generally use the same models as in the 2025 stress test, with only limited adjustments; and
Announced that it has voted to maintain current stress capital buffer (SCB) requirements until 2027, when new SCBs can be calculated using revised models that reflect public comments.

What has changed? Relative to the documents published in October 2025, including the proposed 2026 scenarios, the following details have changed:

Scenarios: The overall narrative and severity of the severely adverse scenario remain substantially similar to the October proposal. The Fed has updated jump‑off values and variable paths to reflect actual fourth quarter 2025 data and the operation of its macro model and scenario guides. Within the global market shock,¹ the Fed introduced two targeted changes to improve internal consistency and plausibility:
- Reduced the severity of some commodity shocks, including oil.
- Refined the treatment of agency pass‑through securities, aligning shocks on deliverable pass‑throughs more closely with to-be-announced securities (TBAs).
Models: The 2026 stress test methodology explains that the Fed will largely reuse the 2025 supervisory models, rather than implementing the broader set of new specifications it proposed in October. It also clarifies how the macro model for stress testing is used to generate paths for GDP, disposable income, inflation and short-term rates from the unemployment path. It provides additional detail on the treatment of potential GDP and the natural rate of unemployment and corrects an error in the published model documentation, without changing term rates from the unemployment path.

What’s next? Bank capital plans are due by April 5^th and the Fed will release the 2026 stress test results by June 30^th. The Fed is also working on finalizing an April 2025 proposal to average SCBs over two years.

Our Take

A transitional year that offers stability now while setting the stage for deeper change

As we predicted when the proposed scenarios were released, the Fed largely held its ground in the face of comments to moderate components like the severity of the decline in commercial real estate prices – consistent with our view that the Fed sees the credibility of the stress test as hinging on its severity. Against this backdrop, some may question the value of future efforts to comment on aspects of the scenarios that they consider unrealistic or excessive. While we think that would constitute an overreaction to this year’s experience, banks should recognize that the Fed will have a high bar for accepting comments that weaken the proposed scenario. It is also not surprising that the Fed made limited adjustments to the model methodology for the 2026 stress test, some of which appear to be related to issues that arose in the 2025 reconsideration process. These targeted refinements reflect an effort to preserve year-to-year continuity rather than introduce additional sources of variability at a time when many elements of capital regulation are under review. Similarly, freezing current SCBs until 2027 simply reflects a Fed that does not want to pre-judge the open rulemaking around this year’s test. While banks that would have had higher SCBs this year may welcome the freeze, others with elevated current SCBs will look forward to the Fed potentially returning to normal operating order and updating SCBs in 2027 – and likely averaging them going forward.

For capital planning teams, this environment reinforces the need to invest in durable capabilities rather than optimize around a single rule. These include strengthening internal modeling and forecasting, improving data infrastructure to meet potential risk-sensitive requirements, reassessing the logic and sizing of management buffers, and preparing for a more financial risk-focused supervisory regime. Banks should use the relative stability of this year’s stress test to strengthen internal readiness, ensure capital plans are anchored in clear risk measurement and maintain flexibility for when the next set of regulatory decisions is finalized.

For more on what 2026 may hold for capital planning and how banks are responding, see Our Take Special Edition: Capital planning in 2026.

On our radar

CFTC withdraws 2024 event contracts proposal and 2025 staff advisory. On February 4th, the CFTC withdrew its 2024 event contracts rule proposal and announced it will not finalize the rule, which would have prohibited certain political event contracts. The agency also withdrew a 2025 staff advisory on sports event contracts. Chairman Selig stated that the withdrawals are intended to eliminate confusion, move away from prohibitions based on “merit,” and set the stage for a new rulemaking.

CFPB adds new requirements to customer complaint portal. Following a November 2025 request for information, on February 5th, the CFPB added a notice and requirements to its consumer complaint portal. The CFPB now requires, for complaints related to credit reporting, that a consumer dispute the credit report with the credit reporting agency before filing a complaint with the CFPB.

FSB highlights vulnerabilities in government bond-backed repo markets and calls for enhanced monitoring. On February 4th, the FSB released a report highlighting that leverage, zero-haircut financing, collateral rehypothecation, demand–supply imbalances, and market concentration in government bond-backed repo markets pose potential financial stability risks.

Treasury Secretary Bessent on the Hill. On February 5th, the Senate Banking Committee held a hearing on the Financial Stability Oversight Council’s annual report, with Treasury Secretary Scott Bessent testifying. Senate Banking Chairman Tim Scott (R-SC) emphasized the link between economic growth, household financial resilience, and financial stability, highlighting FSOC’s recent focus on Treasury market functioning, cybersecurity and AI, as well as GENIUS Act implementation.

^{1 The global market shock is the component of the Fed’s stress test that applies an instantaneous, severe market dislocation to banks with significant trading or counterparty exposures.}