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Congressional Oversight Panel
JUNE OVERSIGHTREPORT
*
 
June 9, 2009
*
Submitted under Section 125(b)(1) of Title 1 of the Emergency EconomicStabilization Act of 2008, Pub. L. No. 110-343
 
Stress Testing and Shoring Up Bank Capital
 
 
 
1
Table of Contents
Executive Summary .............................................................................................................3Section One: Stress Testing and Shoring Up Bank Capital ................................................6A. Overview ............................................................................................................6B. The Stress Tests ................................................................................................13C. Immediate Impact of the Stress Tests ..............................................................27D. A Comment on the Supervisory Process..........................................................29
 
E. Specific Limitations of the Stress Tests ...........................................................30
 
F. Independent Analysis of Stress Tests ...............................................................31
 
G. Next Steps ........................................................................................................35H. Issues ................................................................................................................38
 
I. Recommendations ............................................................................................48
 
J. Conclusions ......................................................................................................49
 
K. Tables ...............................................................................................................50
 
Annex to Section One: The Supervisory Capital Assessment Program:An Appraisal ..........................................................................................................57Section Two: Correspondence with Treasury Update ....................................................117
 
Section Three: TARP Updates Since Last Report ..........................................................118
 
Section Four: Oversight Activities..................................................................................135Section Five: About the Congressional Oversight Panel ................................................137Appendices:APPENDIX I: LETTER FROM CHAIR ELIZABETH WARRENTO FEDERAL RESERVE CHAIRMAN BEN BERNANKEREGARDING THE CAPITAL ASSISTANCE PROGRAM,DATED MAY 11, 2009 .......................................................................................138APPENDIX II: LETTER FROM CHAIR ELIZABETH WARRENTO SECRETARY TIMOTHY GEITHNER REGARDING THEPOSSIBILITY OF THE SECRETARY APPEARING BEFOREA PANEL HEARING IN JUNE, DATED MAY 12, 2009 .................................145
 
 
2APPENDIX III: LETTER FROM CHAIR ELIZABETH WARRENTO SECRETARY TIMOTHY GEITHNER ANDFEDERAL RESERVE CHAIRMAN BEN BERNANKE REGARDINGTHE ACQUISITION OF MERRILL LYNCH BY BANK OF AMERICA,DATED MAY 19, 2009 .......................................................................................147APPENDIX IV: LETTER FROM CHAIR ELIZABETH WARRENTO SECRETARY TIMOTHY GEITHNER REGARDING THETEMPORARY GUARANTEE PROGRAM, DATED MAY 26, 2009 ..............150
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