Full text of Board of Governors of the Federal Reserve System : Documents Relating to the Financial Crisis of 2007-2009 : Federal Reserve Board Makes Announcement Regarding the Supervisory Capital Assessment Program (SCAP), November 9, 2009

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Press Release

Release Date: November 9, 2009
For immediate release
The Federal Reserve Board on Monday said that 9 of the 10 Bank Holding Companies (BHCs) that
were determined in the Supervisory Capital Assessment Program (SCAP) earlier this year to need to
raise capital or improve the quality of their capital to withstand a worse­than­expected economic
scenario now have increased their capital sufficiently to meet or exceed their required capital
buffers. The one exception, GMAC, is expected to meet its remaining buffer need by accessing the
TARP Automotive Industry Financing Program, and is in discussions with the U.S. Treasury on the
structure of its investment. In the SCAP, it was determined that these BHCs needed to augment their
capital by $74.6 billion, almost all in the form of common or contingent common capital, by
November 9.1 These 10 BHCs took the following capital actions:
New issuance of common equity or other eligible securities of $39 billion;
Conversion of existing preferred equity to common equity in the amount of $23 billion; and
Sales of businesses or portfolios of assets that increased common equity by $9 billion.
Some firms also increased capital through other actions, including reduced dividend payments,
issuance of common shares to employee stock ownership plans, and larger­than­anticipated pre­
provision net revenue, to meet their required buffers. As a result of all these actions, Tier 1 Common
equity increased by more than $77 billion at the 10 firms.2
Led by the Federal Reserve, supervisors, economists, and analysts who conducted the SCAP
assessed the amount of capital needed by the 19 largest bank holding companies to withstand
greater­than­expected losses and still remain sufficiently capitalized through 2010 to be able to meet
the needs of their creditworthy borrowers. The release of the assessment results provided important
information about the condition of major U.S. financial institutions during a period of high stress
and uncertainty, and helped to increase public confidence in the banking system.
1. Federal Reserve, "The Supervisory Capital Assessment Program: Overview of Results (10.61
MB PDF)," May 7, 2009. Return to text
2. Tier 1 capital, as defined in the Board's Risk­Based Capital Adequacy Guidelines, is composed
of common and non­common equity elements, some of which are subject to limits on their inclusion
in Tier 1 capital. See 12 CFR part 225, Appendix A, Section 11.A.1. Return to text