Second, the supervisory teams evaluated the banks’ estimates to identify methodological weaknesses, missing information, overly optimistic assumptions, and other problems. Examiners had detailed conversations with bank managers, which led to numerous modifications of the banks’ submissions.
Supervisors then made judgmental adjustments to the banks’ loss and revenue estimates based on sensitivity analyses performed by the firms, comparative analysis across the firms, and the supervisors’ own judgments. Third, the supervisors supplemented these judgmental assessments with objective, modelbased estimates for losses and revenues that could be applied on a consistent basis across firms.