The Federal Reserve finalized two rules to make stress tests for large banks more transparent and less volatile in their effect on capital requirements. One rule requires the Fed board to seek public comment on annual stress-test scenarios and material model changes, while testing banks against two global market shock components each year and using whichever produces the larger loss for each company. The other rule requires stress capital buffers to use the average of a bank’s two most recent annual tests, beginning in 2028. The Fed said the changes could cut yearly volatility in stress-test-driven capital requirements by half. Governors voted 6-1 to finalize the first rule, with Michael Barr dissenting. Separately, the Fed requested comment on revising its noninterest income model, with feedback due 60 days after publication in the Federal Register. Trade groups including the American Bankers Association and Bank Policy Institute, which had sued over the Fed’s December 2024 transparency effort, welcomed the changes.