Rate rise stress tests must be more severe, banks warned

US banks must ensure they are ready to deal with sudden massive rises in interest rates, regulators warned on January 7.

The Federal Deposit Insurance Corporation, the Federal Reserve Board and four other federal financial regulators released an advisory urging banks to overhaul their interest rate risk policies, and warning that the current low rate environment should not blind them to the risk of severe and rapid rate increases.

In particular, the regulators say, banks should project their