The supervisory capital assessment program -- one year later

Almost exactly a year ago, the Federal Reserve and the other bank regulatory agencies publicly reported the results of the Supervisory Capital Assessment Program, or SCAP, also known as the bank stress test. In many respects, the SCAP was a milestone in both the financial crisis and in the practice of banking supervision. By helping to restore confidence in the banking system, the program was an important step toward quelling the crisis. Beyond that, however, our experience during the stress assessments also contributed to the development of tools and approaches that will inform our supervisory process as we work to reduce the likelihood of future financial crises. My remarks today will look back at the assessment program and its effects, then look forward to how our experience with the program and with the crisis in general is influencing the practice of banking supervision. I’ll also make a few comments on how the Federal Reserve is working to restore the flow of bank credit to creditworthy borrowers.