Importantly, as I will elaborate, stress testing adds a macroprudential dimension to our supervision by helping us evaluate the aggregate capital position of the largest banking firms as well as their individual capital levels.
The Federal Reserve – like all bureaucracies – has an unfortunate tendency to create acronyms, so, before I proceed further, let me explain our acronyms, in addition to SCAP, for stress tests. With the SCAP now in the past, we currently have two distinct but related supervisory programs that rely on stress testing.