The Supervisory Capital Assessment Program:Design and Implementation

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The majority of U.S. banking organizations currently have capital levels well above the amounts of to be well capitalized. However, the losses associated with the deepening recession and financial market turbulence have substantially reduced the capital of some banks. Low overall levels of capital especially common shares, together with the uncertain economic environment have eroded public confidence in the quality and quantity of capital held by certain companies, which impairs the ability of the banking system in general to carry out their vital role of credit intermediation. Given the greater the uncertainty surrounding the future course of U.S. economy and potential losses in the banking system,
supervisors believe it would be prudent for large bank holding companies (BHCs) with additional capital for provide a buffer against higher losses than generally expected, and remain adequately capitalized on in the next two years, and able to lend to creditworthy borrowers, such losses will materialize.