Supervisory Capital Assessment Program - SCAP


DEFINITION of 'Supervisory Capital Assessment Program - SCAP'

A financial stress test conducted by the Federal Reserve System to assess the capital buffers of U.S. banking organizations. The Supervisory Capital Assessment Program took place in the spring of 2009 during the financial crisis of 2008-2009 and was intended to measure the financial strength of the nation's 19 largest financial institutions going forward.

BREAKING DOWN 'Supervisory Capital Assessment Program - SCAP'

The stress tests were limited to banking organizations with assets in excess of $100 billion dollars; banks that the Fed considered "too big to fail". The requirements of the stress tests measured each institution's Tier 1 common capital against a baseline scenario and a hypothetical scenario that was deemed more adverse. The final results showed that 10 of the 19 banks were deemed to have inadequate capital. That being said, every bank tested met the legally mandated capital requirements.

  1. Too Big To Fail

    The idea that a business has become so large and ingrained in ...
  2. Tier 1 Capital

    A term used to describe the capital adequacy of a bank. Tier ...
  3. Financial Distress

    A condition where a company cannot meet or has difficulty paying ...
  4. Stress Testing

    A simulation technique used on asset and liability portfolios ...
  5. U.S. Treasury

    Created in 1798, the United States Department of the Treasury ...
  6. Monte Carlo Simulation

    A problem solving technique used to approximate the probability ...
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