Fed's Bank Stress Tests Focus On Equity Levels

Law360, New York (April 24, 2009, 12:00 AM EDT) -- The Federal Reserve has unveiled the methodology behind its stress tests for 19 financial institutions with assets topping $100 billion, revealing a focus on whether banks have the equity levels necessary to cover credit losses.

The Fed released the methodology used in the Supervisory Capital Assessment Program ahead of the expected release of the results on May 4. Bank holding companies will have until Tuesday to challenge the results.

The so-called stress tests, which began in late February, were designed to determine the capital requirements the...
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