The Federal Reserve this month will take a step toward revealing more about its oversight of the financial system, an area where the central bank has yet to match the strides it has taken toward transparency in monetary policy, Bloomberg News reported yesterday. With the scheduled publication of annual stress-test findings in March, the Fed will for the first time describe how rising interest rates could affect the health of the nation’s biggest banks. Last year, the Fed didn’t disclose results of a similar test, even though the U.S. Treasury’s Office of Financial Research had flagged interest-rate risk as the one code-red concern in the financial system. Almost four years after the Dodd-Frank Act gave the Fed unprecedented authority over the banking industry, Democrats and Republicans alike in Congress are demanding more communication on financial risk. Fed officials download billions of pieces of data on loan and securities portfolios as part of their annual stress test, which measures an institution’s readiness to withstand adversity. This year the test expands to the 30 biggest banks, from 18 last year.
