Federal Reserve Outlines TARP Repayment Rules

The Federal Reserve Board outlined the criteria it will use to evaluate applications to redeem U.S. Treasury capital from the 19 U.S. bank holding companies that participated in the Supervisory Capital Assessment Program (referred to as "SCAP", or commonly called the "stress tests"), according to today's press release.  The  Supervisory Capital Assessment Program examined all U.S. bank holding companies with year-end 2008 assets exceeding $100 billion.  The federal government had previously given U.S. bank holding companies in need of capital buffer augmentation until June 8, 2009 to develop a capital plan and until November 9, 2009 to implement that capital plan.  Today's press release notes that redemption approvals for an initial set of U.S. bank holding companies are expected to be announced during the week of June 8, 2009. 

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Federal Regulators Release Bank "Stress-Test" Rules

The Federal Reserve Board released the methodology, commonly referred to as a "stress test," used by federal banking supervisory agencies in their "forward-looking capital assessment" of U.S. bank holding companies today.  The results of the Supervisory Capital Assessment Program, which examined all U.S. bank holding companies with year-end 2008 assets exceeding $100 billion are expected in early May.  Today's white paper notes that "these 19 firms collectively hold two-thirds of the assets and more than one-half of the loans in the U.S. banking system."  The federal bank regulatory agencies participating in the Supervisory Capital Assessment Program are the Board of Governors of the Federal Reserve System, the Federal Reserve Banks, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency. 

Click here for the Federal Reserve Board's press release, and click here for today's white paper.