A little more than 10 years ago, the United States and the world teetered on the brink of economic catastrophe. What was urgently needed was a way to restore confidence in the financial system—a daunting challenge. Neither the banks, nor the regulators, nor the public had a reliable sense of the strength and resilience of our major banks.
The announcement of forward-looking stress-testing results in May 2009 helped restore confidence and stabilize banks by providing a credible and independent picture of their finances.1 These original stress tests evolved into the Comprehensive Capital Analysis and Review, or CCAR, program, which has served to institutionalize capital planning by firms, and supervision by the Fed, as a forward-looking endeavor.