Fed may change stress tests, says Yellen

The Federal Reserve is considering changes to the annual stress tests it gives US banks to move to a more risk-sensitive, firm-specific approach that would raise capital requirements for big banks based on their test results, according to its chair, Janet Yellen.

Testifying at a House of Representatives Financial Services Committee hearing on Wednesday, Yellen said the Fed is "now considering making several changes to our stress testing methodology and process." The stress tests aim to prove that individual banks can withstand a massive financial crisis.

"The existing capital conservation buffer would be replaced with a risk-sensitive, firm-specific buffer that is sized based on stress test results," she said.