GARP Risk Podcast

The episode contains a reasonable number of concrete data points from the CCAR results and provides some non-obvious observations (e.g., credit card vintage deterioration, the countercyclical mechanics explaining the smaller CET1 decline). However, large portions are high-level commentary filled with hedged language and uncertainty-acknowledgment that adds little density for a sophisticated operator.

“credit card segment represented a disproportionate share of the losses. About 20% of the total projected losses is due to credit cards”

“if you look at recent credit card performance, say credit cards that originated back in 2022 or 2023, their performance is not that great. It's actually been deteriorating. So that's still in a relatively strong economic environment”

The observation that tariffs had been entirely absent from stress testing models because they were not historically considered a material risk factor is a genuinely useful framing. Most other takes - transparency vs. gaming tradeoff, geopolitical risk is hard to model, AI adoption is growing - are conventional and widely circulated in risk management discourse.

“for many years, decades, we haven't worried about tariffs... that hasn't been even an issue to any large degree in terms of financial market or credit loss impact”

“it could take several days just to develop a new scenario. And by the time you develop it, the rules on the ground may have changed once again”

Chris Deridis is a legitimate senior practitioner - deputy chief economist at Moody's Analytics with two decades of stress testing focus - and demonstrates genuine command of CCAR mechanics and modeling challenges. However, he is an analytics vendor and commentator rather than a bank CRO, regulator, or someone who has designed these frameworks from the inside, which limits the depth of operational, inside-the-tent perspective.

“Chris Deridis, the deputy chief economist at Moody's analytics and the author of Risk Intelligence's Modeling Risk column. Across the past two decades, Chris has written many thought provoking articles”

“this is not a new criticism, actually. I'd say from, uh, the very beginning of stress testing, we go back to 2009, banks have complained about the lack of transparency”

The episode earns credit for pulling specific CCAR metrics (1.8 pp CET1 decline, $550B aggregate losses absorbed, $44B trading losses, 16.9% credit card loss rate) and citing survey data on AI adoption. It loses points for the absence of named banks, specific sector case studies, or deeper drill-downs into any single finding, and for a noticeable discrepancy where credit cards are described as both 20% and 28% of losses without resolution.

“common equity tier 1 capital...ratios forecast fell only 1.8 percentage points and that's the smallest decline that we've seen in recent years. If you go back to 2000, you've had declines that were in the range of 2.1% to 2.8%”

“banks did have a reported $44 billion loss on, uh, trading portfolios, and it was concentrated in a few of the larger, most complex institutions”

The host sequences topics competently and does drill one level deeper on trading losses after the general red-flags question. However, questions are frequently leading or softball ('I imagine this is all difficult...'), the host provides near-constant affirmative back-channeling ('right,' 'yeah') without any genuine pushback, and no claim goes meaningfully challenged despite several areas - like the credit card percentage discrepancy - that warranted follow-up.

“I imagine that this is all difficult for financial institutions to track because there are so many different potential scenarios”

“What about with respect to trading losses? Can you talk about that a little bit”