What is DFAST and how does it differ from CCAR?

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AcadiFi · Accepted Answer

DFAST (Dodd-Frank Act Stress Tests) is the statutory stress test mandated by Section 165(i) of the Dodd-Frank Act. CCAR (Comprehensive Capital Analysis and Review) is a separate supervisory program used by the Federal Reserve to evaluate capital plans and approve distributions. They share the scenarios, FR Y-14 data, and projection models, but differ in scope and output.

Key differences: (1) Capital actions. DFAST uses standardized assumptions (dividends at recent rates, no buybacks beyond contractual commitments, no new issuance). CCAR uses the bank's actual planned capital actions for the nine-quarter horizon. (2) Purpose. DFAST results are disclosed publicly and are informational. CCAR results drive the Stress Capital Buffer under the post-2020 framework and historically drove objections to dividend/buyback plans. (3) Scope. DFAST applies to Category I-IV banks under the 2019 tailoring rule (asset threshold $100B). CCAR traditionally applied to Category I and II BHCs with additional qualitative elements.

(4) Qualitative assessment. Pre-2019, CCAR had a qualitative objection dimension for the largest firms evaluating risk management, internal controls, and capital planning processes. This was largely folded into supervisory ratings (LFI rating) rather than standalone objections. (5) Timing. DFAST results are released in late June; CCAR SCB is finalized simultaneously.

For an FRM candidate, the important distinction is that DFAST is a compliance test while CCAR is a supervisory judgment. Under tailoring, Category IV banks run DFAST biennially (odd years), while Category I-III run annually.

What is DFAST and how does it differ from CCAR?

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