The 2009 Supervisory Capital Assessment Program
What is the 2009 Supervisory Capital Assessment Program?
The 2009 Supervisory Capital Assessment Program was a series of stress tests completed during the spring of that year by US regulators. They were conducted to find out whether America's largest and most important banks had sufficient capital to withstand an intensification of the financial crisis, then at its height.
Where have you heard about the 2009 Supervisory Capital Assessment Program?
You may have read about it in accounts of the financial crisis and subsequent Great Recession. As an investor, you may own shares in banks that refer to the program and subsequent stress testing in their accounts or other corporate literature.
What you need to know about the 2009 Supervisory Capital Assessment Program.
The 2007 credit crunch and the financial crisis that followed exposed the fact that a number of banks did not have the capital buffers needed in relation to the risks they were taking. To gauge the extent of the problem, the American central bank, the Federal Reserve Board, conducted the tests on the 19th largest US banks, those with assets of $100 billion or more.
These were deemed to be 'systemically important', in that any problems within these banks could affect the system as a whole. More commonly, they were described as 'too big to fail'. The program, which tested capital levels against two possible scenarios, one more extreme than the other, found that, while all banks met the legal minimum capital levels, ten of the 19 were inadequately capitalised.