Fed to adapt stress tests for insurance firms, says Fischer
The US Federal Reserve is tweaking its stress-testing model to cover the three global insurance companies that it supervises, Fed Vice Chairman Stanley Fischer said on Wednesday.
"While distress at these firms poses risks to financial stability, particularly during a stressful period, certain sources of risk to these firms are distinct from the risks banking organizations face," Fischer said in a speech to a central bank conference in Stockholm.
It was crucial for the Fed to ensure that the tests for the insurance firms were "appropriate," Fischer added.
The Federal Stability Oversight Council, an umbrella group of financial regulators, has described Prudential, MetLife and AIG as "systemically important", claiming that a failure of any these firms could deal a severe blow to the US economy.
For the last five years, the US central bank has carried out stress tests on bank holding companies with at least $50bn in assets.