May 22
The risks to the legacy of Barney Frank
➤ The article reflects on the legacy of Barney Frank, particularly the Dodd-Frank Act stress test (DFAST), a key regulatory tool for assessing bank capital adequacy. ➤ DFAST, initially a feared 'closed-book exam' for banks, is being diluted through increased transparency and public input, potentially reducing its effectiveness in constraining risky behavior. ➤ The author laments the watering down of this significant regulatory feature, suggesting it will revert to a more 'spreadsheet exercise' rather than a genuine disruption to bank risk management.
