Required reading:

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:

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Source:
The Treasury Capital Assistance Program and the Supervisory Capital Assessment Program
JOINT STATEMENT:
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

http://www.federalreserve.gov/newsevents/press/bcreg/20090506a.htm

Category: Bailouts, Credit

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

30 Responses to “Treasury Capital Assistance Program”

  1. CNBC Sucks says:

    I woke up SHAKING in my boots nervous that the banks will not pass the stress tests. I am WORRIED feverishly that the government will not provide the capital these banks need if they fail. And I am DEEPLY concerned that the markets will react harshly to negative results.

    Why didn’t they just name this thing the Capital Redistribution Assessment Program?

  2. petersticks says:

    Did I read correctly?

    “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.”

    WOW. Its never going to stop!

  3. mark mchugh says:

    It’s all about the acronyms.

  4. danm says:

    Green chutes

  5. danm says:

    If you analyze the Fed’s BS, you’ll see that there is only one reason why any money is flowing. It’s because the Fed is propping up everything.

    There is absolutely no sign the Fed can stealthily walk away.

  6. neverwas says:

    Too bad Fed employees are completely incompetent.

    Did you see the Federal Reserve Inspector General testify she knows nothing about the trillions of dollars lent or spent by the Fed?

    http://www.youtube.com/watch?v=PXlxBeAvsB8

    I wish he would have asked her WTF does she do all day.

  7. “It’s because the Fed is propping up everything.” !

    People should get serious about “Things”, relative prices have been changing during this ‘equity’ Run..

    see: http://quotes.ino.com/chart/?s=NYBOT_CR&t=f

    ~200 to ~240 is ~20%.. as ex.

  8. [...] Treasury Capital Assistance Program Leave a comment | [...]

  9. or, differently: http://stockcharts.com/h-sc/ui?s=$INDU:$CRB&p=D&b=5&g=0&id=0

    ~36/~32 = 9/8= 1.125 12.5% relative ‘Rally’ Equities v. “Things”

    different than, http://stockcharts.com/h-sc/ui

    ~8500/~6600 = ~1.2878 28.8% DOW ‘Rally’

    seems like we’re all going to go to Relative Pricing school..

  10. CNBC Sucks says:

    Hoffer – are you saying that the government is propping up equities more than commodities?

  11. Todd says:

    When do the results get released on the Banks?

  12. Todd says:

    Never mind. The new Acronyms were throwing me. If you exaggerate the “S” in SCAP it becomes more meaningful.

  13. no, trying to point out that while the “Paper” gains in Equities have been impressive, their gains v. “Things” is, certainly, less so..

    CNBC S,

    you’re the one who keeps beating the drum of ‘money printing’/ ‘higher equities’, I was just trying point out that that ‘money printing’ gets reflected across all ‘non-levered’ prices/’non-credit dependent’ prices..

  14. some_guy_in_a_cube says:

    The alphabet soup coming from the government never ends, just like their lies.

    Enjoy the deluded, generational-bottom, green-shoots, mean-reversion, suckers rally.

    The governments lies and investors delusions all lead to the same place, and I’ll see you there, at SPX 150.

  15. KidDynamite says:

    am i the only one who remembers John Thain saying, in early 2008, “as long as things don’t get worse, we won’t need any more capital” ????

    it all comes back to “as long as things don’t get worse”

  16. CNBC Sucks says:

    Gotcha. I was just clarifying, not questioning. Of course, the government will cook inflation figures too so that real returns on equities look better anyway.

  17. Transor Z says:

    @Mark: Sorry, I thought you were asking a different question on yesterday’s thread re: Bell Labs. Yes — how can it be anything other than devastating to gut Bell Labs, the crown jewel of US industrial R&D for most of the 20th century? There’s just no place for “long view” in today’s corporations. Just isn’t. And somehow the sum of our short-sighted parts are supposed to add up to sustainable prosperity. What a joke. BTW, the Wired article didn’t mention all of the Nobel winners who also spent time there during their careers before moving on.

    @CNBCSucks: Meant to say yesterday that I thought your recommendation to dumb down the analysis was funny and right on.

    Also: The Elliott Associates investor letter excerpted at ZH last night also questions whether there’s any exit strategy for the intervention taking place.

  18. Mannwich says:

    @danm: Exactly. The Fed is trapped at this point, so they have to stay in the game all-in until this thing blows up. The minute they walk away, it blows up as well. They are trapped.

  19. Transor,

    it’s pretty amazing, nearby was an arm of Western Electric/Lucent/Alcaltel

    needless to say, I’ve had a front row seat to that scene as it evolved through ’84 to present.

    if you ever get bored, you should go to the USPTO and look at the dates of some of Bell Labs, publicly viewable, Patents, and compare them to the dates you remember seeing the stuff ‘in the wild’..

  20. leftback says:

    Morning, I wonder who was buying the XLF at 13? They must have watched the Tiny Tim infomercial.

    For those of you who worried about my sanity last night, my SRS is green and my FAZ is OK too. I saw the 10-year at 3.27% this morning and I am wondering if this is about the time where Timmy gets the phone call from Beijing.

  21. Mannwich says:

    I’m going to go out on a limb and declare that QID has found a bottom for a while.

  22. Patrick Neid says:

    I have a feeling the bond and dollar markets will be resolving all this mania money printing on its own.

  23. leftback says:

    Patrick, they won’t let the long bond get away – it will crush any resolution of the housing market. Somewhere between 3.25-3.50% on the 10-year TPTB are going to have to stop propping up stocks and start buying Treasuries.

    They have achieved their aim of pumping the XLF and now they can dump it. I looked at BAC today and it has a multiple of 19.5 with the prospect of issuing 25-50% more stock…. there will be some pain for the new longs.

  24. Transor Z says:

    Mark,

    Hmm… do Unix and C count as a signicant R&D products? ;)

    I just don’t see those things catching on.

  25. Patrick Neid says:

    Leftback,

    I’m not certain. The bond and dollar markets are so large that they should be beyond absolute control. Day to day certainly but long term I don’t think so. Since Obama and crew took office look at the ten year monthly chart.

    It’s always been my theory that severe recessions are part of the business cycle but depressions are induced by stupid policies. We have some stupid policies being implemented by my standards. Printing trillions qualifies as a starting point no matter the rational.

  26. Transor,

    and if peep ever figured out how much ‘utilizing’ MSFT products has cost them, it’d be akin to what Henry Ford said about our system of banking & credit..
    “It is well that the people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning.”

    as an aside, I love these greenwashed ‘enviros’ that don’t have the first clue about the Economy, let alone the Environment..

  27. leftback says:

    Patrick,

    In the longer run I agree, in the short run I would not be surprised to see buying at the long end of the curve.

  28. ButtoMcFarty says:

    Supervisory
    Capital
    Assistance
    Team

    Never Fear!!

    SCAT is Here!!

  29. danm says:

    “It’s because the Fed is propping up everything.” !
    ————–
    Talking about debt on balance sheets