Guarantees and Capital Infusions in Response to Financial Crises C: U.S. 2009 Stress Tests

Yale Program on Financial Stability Case Study 2015-3C-V1

10 Pages Posted: 26 Jan 2016

See all articles by Chase P. Ross

Chase P. Ross

Yale School of Management

June Rhee

Yale University - Yale Program on Financial Stability; Harvard Law School; Yale University - Yale Program on Financial Stability

Andrew Metrick

Yale School of Management; National Bureau of Economic Research (NBER); Yale University - Yale Program on Financial Stability

Date Written: July 15, 2015

Abstract

When President Obama took office in 2009, the Treasury focused on restarting bank lending and repairing the ability of the banking system as a whole to perform the role of credit intermediation. In order to do so, the Treasury needed to raise public confidence that banks had sufficient buffers to withstand even a very adverse economic scenario, especially given heightened uncertainty surrounding the outlook of the U.S. economy and potential losses in the banking system. The Supervisory Capital Assessment Program (SCAP) — the so-called "stress tests" — sought to rigorously measure the resilience of the largest bank holding companies. Those found to have insufficient buffers were able to raise funds from the private sector, and if unable to do so, the Capital Assistance Program (CAP) would capitalize the firm with public capital.

Keywords: Systemic Risk, Financial Crises, Financial Regulation, Stress Test, Crisis Intervention, Tier 1 Capital

JEL Classification: G01, G28

Suggested Citation

Ross, Chase and Rhee, June and Metrick, Andrew, Guarantees and Capital Infusions in Response to Financial Crises C: U.S. 2009 Stress Tests (July 15, 2015). Yale Program on Financial Stability Case Study 2015-3C-V1. Available at SSRN: https://ssrn.com/abstract=2718600 or http://dx.doi.org/10.2139/ssrn.2718600

Chase Ross (Contact Author)

Yale School of Management

165 Whitney Street
New Haven, CT 06511
United States

June Rhee

Yale University - Yale Program on Financial Stability ( email )

135 Prospect Street
P.O. Box 208200
New Haven, CT 06520-8200
United States

Harvard Law School ( email )

1563 Massachusetts Ave
Cambridge, MA 02138
United States

Yale University - Yale Program on Financial Stability

165 Whitney Avenue
P.O. Box 208200
New Haven, CT 06520-8200
United States

Andrew Metrick

Yale School of Management ( email )

165 Whitney Avenue
New Haven, CT 06511
United States
(203)-432-3069 (Phone)

HOME PAGE: http://faculty.som.yale.edu/andrewmetrick/

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Yale University - Yale Program on Financial Stability

165 Whitney Avenue
P.O. Box 208200
New Haven, CT 06520-8200
United States

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