Update: Stress Test White Paper lacks detail…

Update: From WSJ:

Fed White Paper on Stress Testing Procedure pdf here: FED Press Release here;  Market averages back to their trend line of the day, Dow up 130 to 8086, S&P up 14 to 86 NAS up 39 to 1691

For release at 2:00 p.m. EDT

A white paper describing the process and methodologies employed by the federal banking supervisory agencies in their forward-looking capital assessment of large U.S. bank holding companies was published on Friday.

The white paper is intended to assist analysts and other interested members of the public in understanding the results of the Supervisory Capital Assessment Program, expected to be released in early May. All U.S. bank holding companies with year-end 2008 assets exceeding $100 billion were required to participate in the assessment, which began February 25. These institutions collectively hold two-thirds of the assets and more than half the loans in the U.S. banking system.

More than 150 examiners, supervisors and economists from the Federal Reserve, Office of the Comptroller of the Currency, and Federal Deposit Insurance Corporation participated in this supervisory process. Starting from two economic scenarios–a consensus estimate of private-sector forecasters and an economic situation more severe than is generally anticipated–they developed a range of loss estimates and conducted an in-depth review of the banks’ lending portfolios, investment portfolios and trading-related exposures, and revenue opportunities. In doing so, they examined bank data and loss projections, compared loss projections across firms, and developed independent benchmarks against which to evaluate the banks’ estimates. From this analysis, supervisors determined the capital buffer needed to ensure that the firms would remain appropriately capitalized at the end of 2010 if the economy proves weaker than expected.

The Supervisory Capital Assessment Program: Design Summary (287 KB PDF)

2009 Banking and Consumer Regulatory Policy

Released now, the parameters were apparently already out there, they used Case Shiller Housing Value Futures in their projections…CITI already tested itself against that same metric…

they are not giving the Tangible Common Equity number they want from the banks is it 3%? 4%? and they are also not giving out the specific projected losses or the size of the capital buffer the regulators want…..meanwhile the NY Post is reporting Vikram Pandit is out as CITI CEO shortly….

They gave the categories of loans they looked at and the counterparty risk but not the other parameters, reporters asked on the conference call…..

Will get up the CNBC clip as soon as it’s available

It’s managing expectations they say..a whole lotta nothin’ just came out…they Put on the Ritz for us…they don’t want anyone running the numbers before the banks shore up capital..

Next words will be the results of the stress tests on May 4th, I think the banks will begin to leak their own inner results before that..

The markets are turning down now, were up over 100 now up 50 on the Dow….

Submitted by IrishC

April 24, 2009. Tags: Banking stress test white paper, CITI, Currency, Economy, Fed, FEDERAL RESERVE, Finance, Financial Stress Tests, Politics, recession, Stress Tests, TARP, TIMOTHY GEITHNER, Vikram Pandit, Wall St. CITI, citigroup, Economy, FDIC, Film, Finance, TARP, Uncategorized, Wall St. Comments off.