DFAST
Also known as: Dodd-Frank Act Stress Test
Annual stress testing required for banks above asset thresholds under Dodd-Frank.
DFAST is the statutory company-run and supervisory stress test required by Section 165(i) of the Dodd-Frank Act, applying to bank holding companies and insured depository institutions above asset thresholds set by the Federal Reserve, OCC, and FDIC. Originally applying to firms with $50 billion or more in total consolidated assets, the threshold was raised to $100 billion (with a tailoring framework distinguishing Categories I-IV) by the 2018 EGRRCPA. Banks project balance sheet, income, and capital trajectories under regulator-prescribed scenarios and publish summary results; the Federal Reserve also runs supervisory stress tests on the same firms. DFAST and CCAR were operationally consolidated in the 2020 reform that introduced the Stress Capital Buffer.
Core components
- Section 165(i) statutory mandate
- Severely adverse and baseline scenarios
- Company-run stress test (formerly mid-cycle and annual
- mid-cycle eliminated 2019)
- Supervisory stress test
- Public disclosure of summary results
- Tailoring categories I-IV (post-EGRRCPA)
Primary use case
Statutory stress testing of large US banks; transparency to markets via published results; foundation for Stress Capital Buffer calibration jointly with CCAR.
Common criticisms
- Substantial operational overlap with CCAR (consolidated 2020 in response)
- EGRRCPA threshold relaxation removed mid-size banks from coverage, criticized after the SVB and Signature failures in 2023
- scenario design contested
- bank model convergence to supervisory expectations
- cost-benefit for smaller covered firms questioned.
Lineage
- Child of
- Dodd-Frank Act
- Siblings
- CCAR, Basel III, CECL
- Derived from
- Dodd-Frank Act