Supervisory stress testing has become a cornerstone of post-crisis prudential regulation. Stress testing, unlike traditional capital requirements, provides a forward-looking assessment of losses that would be suffered under adverse economic scenarios. The simultaneous testing of the largest firms lends a perspective on a large part of the banking system and facilitates identification of common exposures and risks. During the financial crisis, the success of an ad hoc stress test in assessing the capital needs of, and restoring confidence in, the nation's largest financial institutions encouraged Congress to make ... (full story)