'Stress Test' Home Price Scenarios

Check out the real estate projections the government is using in its analysis of bank balance sheets.

By SHARE

The Fed on Friday released additional details of the "stress test" that regulators are using to determine whether or not the nation's largest banks have sufficient capital to handle the coming economic hardships. In constructing the test, regulators made forward-looking assumptions about key macroeconomic trends--unemployment, GDP, home prices--that would influence bank performance in 2009 and 2010. These assumptions were divided into a baseline and a more adverse scenario. Banks found to be lacking sufficient capital will be required to raise more cash through private investors or from Uncle Sam. Although regulators aren't expected to make the results public until May 4, the Fed said Friday that "most U.S. banking organizations currently have capital levels well in excess of the amounts required to be well capitalized."

Here's a look at the projections for home prices that regulators used in the "stress test."

http://www.usnews.com/dbimages/master/10729/FE_PR_090424homefront3.JPG
http://www.usnews.com/dbimages/master/10731/FE_PR_090424homefront4.JPG