expert judgments. third, the supervisors'judgmental assessments were supplemented by objective, modelbased estimates for losses and revenues that could be applied on a consistent basis across firms. for example, we used statistical models to estimate residential mortgage losses at see board of governors of the federal reserve system ( 2009 ), " the supervisory capital assessment program : design and implementation, " white paper ( washington : board of governors, april 24 ). see board of governors of the federal reserve system ( 2009 ), " joint statement by secretary of the treasury timothy f. geithner, chairman of the board of governors of the federal reserve system ben s. bernanke, chairman of the federal deposit insurance corporation sheila bair, and comptroller of the currency john c. dugan : the treasury capital assistance program and the supervisory capital assessment program, " joint press release, may 6. see board of governors of the federal reserve system ( 2009 ), the supervisory capital assessment program : overview of results ( washington : board of governors, may 7 ). firms based on loan data submitted by the firms as part of the exercise. each participating institution was asked to supply detailed information, in a standardized format, about the composition of its residential real estate portfolios, including breakdowns by type of product, loan - to - value ratio, fico score, year of origination, and so on. these data allowed supervisors to consistently estimate potential future losses across firms using a variety of independently constructed models. some of these models were already in use to monitor risk as part of the ongoing supervisory oversight process, while others were developed or refined specifically for the capital assessment exercise. similarly, to assess firms'revenue projections for 2009 and 2010, the agencies examined the components of expected revenue in detail, compared the projections to historical results, and cross - checked the underlying assumptions with projections of portfolio growth, funding costs, and the like. the agencies also used more - formal statistical analyses to develop firm - by - firm forecasts that would reflect the historical relationship between revenues and macroeconomic conditions, thereby enabling them to assess which components were less likely to be sustainable in a weaker economy. information from all of these sources was incorporated into the final revenue projections. finally, the supervisors systematically incorporated all of these inputs into loss, revenue, and reserve estimates for each institution. determining the size of the capital buffer a key question in this assessment was the appropriate size of the capital buffers that these firms would be required to hold, as well

it helps reduce uncertainty among investors regarding future losses and capital needs, and thereby improves the banking system's access to private capital, one of the key objectives of the program will have been achieved. it will be some time before we can evaluate the success of the program on this criterion. however, the initial indications are encouraging. each of the 10 banks requiring an additional capital buffer has pledged to have the necessary buffer in place by the november 9 deadline. many of the banks are well ahead in finding private - sector options for increasing their common equity, and several have announced plans for new equity issues. in another positive sign, several have announced plans to issue long - term debt not guaranteed by the fdic. lessons from the assessment program for the supervisory process we've learned important lessons in the capital assessment process that will inform our supervisory efforts in the future. notably, the process of comprehensively evaluating 19 major firms represented an important step forward in consolidated supervision, as it gave us insights into the challenges posed in understanding risks and exposures across complex organizations. the cross - firm aspects of the assessment program were also instructive from a supervisory point of view. as i have mentioned, unlike traditional examinations focused on individual banks, the assessment process specifically incorporated cross - firm and aggregate analyses of a set of firms that constitute a majority of the banking system. this approach allowed a broader analysis of risks than is possible within the traditional supervisory focus on individual institutions. supervisors evaluated loss rates for similar portfolios using consistent data and metrics, allowing them to identify outliers and more effectively evaluate the quality of individual firm estimates. the process was an iterative one, with both the firms and supervisors conducting sensitivity analyses around key assumptions. the federal bank regulators – the federal reserve, occ, and fdic – cooperated extensively throughout this process, from the design to the implementation. in addition, within each agency, many resources across a range of skills were brought to bear. for example, quantitative experts supported examiners by incorporating statistical tools to facilitate benchmarking across institutions and to develop consistent loss estimates. we learned from this effort that it is not a simple matter to simultaneously evaluate the consolidated risks for two - thirds of the assets in the u. s. banking system, using a common forward - looking framework and common metrics. but it was an enlightening exercise that will improve the toolkit we use to help ensure the safety and soundness not just of individual firms, but of the financial system more