Bill would require ‘stress test’ of financial system, assessment of response to disaster

The Fiscal Contingency Preparedness Act is legislation that would require the Department of Treasury to conduct annual “stress tests” on the federal government’s finances.

The legislation would require the Treasury to examine the U.S. government’s financial ability to respond to potentially catastrophic events, including an economic recession or a significant natural disaster, and put forth a report on the short- and long-term fiscal risks and impacts associated with such a response.

U.S. Sens. Mark R. Warner of Virginia and Todd Young of Indiana introduced the Fiscal Contingency Preparedness Act last week.

“The past decade has taught us the importance of bracing for the unexpected – whether that be a world-wide pandemic, a devastating weather event, or a cyberattack on major infrastructure. This legislation will allow the government to take a hard look at our nation’s financial resilience in the face of various crises, disasters and other extraordinary events, and provide Congress with critical context needed to make important financial and policy decisions,” Warner said.

The Fiscal Contingency Preparedness Act would require that the Secretary of the Treasury work with the Director of the Office of Management and Budget (OMB) to complete annual assessments, which would be subject to audit by the Government Accountability Office (GAO). The bill would assess distinct shocks to the fiscal health of the economy, including events like an economic recession or depression, a domestic energy crisis, a natural disaster, a health crisis (such as a global pandemic), a significant armed conflict or event, a significant cyber attack or a financial crisis.

“The United States has faced several threats to the stability of our economy and financial systems in recent years, including the 9-11 attacks, the 2008 financial crisis, and the COVID-19 pandemic. Our bill will require yearly reviews of America’s fiscal strength to ensure policymakers can properly respond to future emergencies and make informed policy decisions,” Young said.

U.S. Reps. Ben Cline of Virginia and Jared Golden of Maine introduced the bill in the U.S. House of Representatives.