CCAR
Also known as: Comprehensive Capital Analysis and Review
Federal Reserve's annual capital adequacy assessment of large bank holding companies.
CCAR is the Federal Reserve's annual program assessing whether large US bank holding companies have sufficient capital to continue operations and meet obligations through severely adverse economic conditions. It descends from the 2009 Supervisory Capital Assessment Program (SCAP) crisis exercise and was formalized in 2011, integrating capital planning evaluation, stress testing, and capital action review (dividends, repurchases). Through 2017 the Federal Reserve could object to capital plans on quantitative or qualitative grounds; the qualitative objection was largely eliminated for most firms by 2019 with weak-capital-planning firms still subject to it. Since 2020 CCAR has been integrated with the Stress Capital Buffer (SCB) framework, which uses stress test results to set firm-specific buffer requirements that flow into Pillar 1 minimums.
Core components
- Annual capital plan submission
- Severely adverse and baseline scenarios (adverse scenario eliminated 2020)
- Quantitative assessment vs minimums and SCB
- Qualitative review for firms with weaknesses
- Stress Capital Buffer (SCB) calibration
- Global Market Shock and Counterparty Default components for largest firms
- DFAST integration
Primary use case
Federal Reserve supervision of large BHC capital adequacy; setting of firm-specific Stress Capital Buffer requirements; constraint on capital distributions.
Common criticisms
- Supervisory model opacity creates compliance-by-guessing dynamics
- convergence of bank models toward Fed expectations may reduce diversity
- high program cost
- pro-cyclicality concerns about stress-tested capital requirements
- tailoring under EGRRCPA criticized post-SVB
- uncertainty over Federal Reserve's stated 2024 intent to publish models for comment.
Lineage
- Child of
- Dodd-Frank Act
- Siblings
- DFAST, Basel III, CAMELS Rating
- Derived from
- Dodd-Frank Act