The Federal Reserve is overhauling its annual stress tests for major US banks in response to legal challenges and regulatory scrutiny. These tests, crucial since the 2008 financial crisis, simulate severe economic scenarios to ensure banks can withstand downturns without taxpayer bailouts. In December 2024, major bank groups sued the Fed, citing a lack of transparency and unpredictable capital requirements. In response, the Fed announced plans to seek public input on significant changes, including publishing stress test models for public commentary and averaging results over two years instead of relying on a single annual snapshot. Key deadlines include December 1, 2025, for comments on the 2026 adverse scenario and January 22, 2026, for broader feedback on model transparency. The Fed aims to build a robust administrative record to defend against legal challenges, especially after the end of Chevron deference, which previously protected federal agencies from certain lawsuits. The transition to new capital buffer regulations is delayed until 2027, reflecting the complexity of the overhaul. This move is intended to enhance the resilience of banks during economic downturns while addressing legal and regulatory concerns.