Our estimates do not include the sizable losses that have already been recognized by the 19 banks – about $ billion of loans and securities in the last six months of 2007 and in 2008 – because they are already reflected in the firms' balance sheets.
Moreover, while we exclude losses beyond 2011, this limit would only be material for sizing the capital buffer if those losses were expected to substantially exceed pre-provision earnings after 2011, an outcome that we do not expect. Second, a few private-sector estimates implicitly or explicitly assumed mark-to-market or liquidation prices for loans, which effectively incorporate a substantial liquidity discount in today's market.