Money Talk: FDIC releases 2016 stress testing for banks with assets of $10 billion or more

Editor’s note: Each Monday, Talk Business & Politics provides “Money Talk,” a wrap-up of banking and financial news. 

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FDIC RELEASES 2016 STRESS TESTING FOR BANKS WITH ASSETS OF $10 BILLION OR MORE
The Federal Deposit Insurance Corporation (FDIC) has released the economic scenarios that will be used by certain financial institutions with total consolidated assets of more than $10 billion for stress tests as required under the Dodd-Frank Wall Street Reform Act.

The baseline, adverse, and severely adverse scenarios include key variables that reflect economic activity, including unemployment, exchange rates, prices, income, interest rates and other salient aspects of the economy and financial markets. The baseline scenario represents expectations of private sector economic forecasters. The adverse and severely adverse scenarios are hypothetical situations designed to assess the strength and resilience of financial institutions and their ability to continue to meet the credit needs of households and businesses under stressed economic conditions. Click here to learn more.

CONSUMER PROTECTION AGENCY ASKS BANKS TO HELP CUSTOMERS AVOID OVERDRAFTING
The Consumer Financial Protection Bureau (CFPB) is taking steps to improve checking account access amid concerns that consumers are being sidelined by the lack of account options and by inaccurate information used to screen potential customers. The CFPB recently sent a letter to the 25 largest retail banks encouraging them to make available and widely market lower-risk deposit accounts that help consumers avoid overdrafting.

The CFPB also issued a bulletin warning banks and credit unions that failure to meet accuracy obligations when they report negative account histories to credit reporting companies could result in Bureau action. And finally, the CFPB is providing consumers with resources to help navigate the deposit account system. The letter sent to the financial institutions is available here.

U.S. HOUSEHOLD DEBT BALANCES INCREASED SLIGHTLY IN THE FOURTH QUARTER OF 2015
Total U.S. household indebtedness was $12.12 trillion for the period ended Dec. 31, 2015, a $51 billion (0.4%) increase from the third quarter of 2015. Overall household debt remains 4.4% below its 2008 Q3 peak of $12.68 trillion, according to the Federal Reserve Bank of New York’s Quarterly Debt and Credit Report.

Mortgage balances, the largest component of household debt, were roughly flat in the fourth quarter. Mortgage balances shown on consumer credit reports stood at $8.25 trillion, an $11 billion drop from the third quarter of 2015. Balances on home equity lines of credit (HELOC) dropped by $5 billion to $487 billion.