During this period of extraordinary economic uncertainty, the U.S. federal banking supervisors believe it to be important for the largest U.S. bank holding companies (BHCs) to have a capital buffer sufficient to withstand losses and sustain lending even in a significantly more adverse economic environment than is currently anticipated. In keeping with this aim, the Federal Reserve and other federal bank supervisors have been engaged in a comprehensive capital assessment exercise–known as the Supervisory Capital Assessment Program (SCAP)–with each of the 19 largest U.S. BHCs.
The SCAP will be completed this week and the results released publicly by the Federal Reserve Board on Thursday May 7th, 2009 at 5pm EDT. In this release, supervisors will report–under the SCAP “more adverse” scenario, for each of the 19 institutions individually and in the aggregate–their estimates of: losses and loss rates across select categories of loans; resources available to absorb those losses; and the resulting necessary additions to capital buffers. The estimates reported by the Federal Reserve represent values for a hypothetical ‘what-if’ scenario and are not forecasts of expected losses or revenues for the firms. Any BHC needing to augment its capital buffer at the conclusion of the SCAP will have until June 8th, 2009 to develop a detailed capital plan, and until November 9th, 2009 to implement that capital plan.
The SCAP is a complement to the Treasury’s Capital Assistance Program (CAP), which makes capital available to financial institutions as a bridge to private capital in the future. A strong, resilient financial system is necessary to facilitate a broad and sustainable economic recovery. The U.S. government reaffirms its commitment to stand firmly behind the banking system during this period of financial strain to ensure it can perform its key function of providing credit to households and businesses.
Details are here:
The Treasury Capital Assistance Program and the Supervisory Capital Assessment Program
SECRETARY OF THE TREASURY TIMOTHY F. GEITHNER
CHAIRMAN OF THE BOARD OF GOVERNORS FEDERAL RESERVE SYSTEM BEN S. BERNANKE
CHAIRMAN OF THE FEDERAL DEPOSIT INSURANCE CORPORATION SHEILA BAIR
COMPTROLLER OF THE CURRENCY JOHN C. DUGAN
May 6, 2009