I will then suggest some ways in which the effectiveness of stress testing can be further enhanced with greater transparency. Ten years ago, in May of 2009, the Fed and the Treasury Department released the first stress test results under the Supervisory Capital Assessment Program (SCAP). At that moment, the U.S. economy was in free fall.
The United States had lost an astonishing three million jobs in the previous four months. One significant reason for these losses was that many businesses were severely constrained in their access to funding and found it impossible to predict when that access might improve.