SCAP and CAP Overview

When President Obama took office in 2009, Treasury was focused not only on preventing a collapse of the nation's banking system, but on restarting lending by banks. In order to do so, it was necessary to raise confidence that banks had sufficient resources to weather even a very adverse economic scenario to make it possible for them to raise additional private capital.

So, to restore confidence to the financial system and get credit flowing again, it was critical to recapitalize the banking system, and ensure that the largest banks in the country had sufficient capital to support lending, even in a more severe scenario.

To accomplish this, Treasury worked with federal banking regulators to develop a comprehensive 'stress test' known as the Supervisory Capital Assessment Program (SCAP) to determine the health of the 19 largest bank holding companies. This forward-looking test provided unprecedented levels of transparency and clarity to address uncertainty in the banking system.

In conjunction with the SCAP, Treasury announced that it would provide capital under TARP through the Capital Assistance Program (CAP) to those institutions that needed additional capital but were unable to raise it through private sources. CAP was offered to all banks and qualifying financial institutions, not solely to those banks that had been subject to the SCAP.

In May 2009, the Federal Reserve released the results of the SCAP. It found that nine of the 19 firms examined under the SCAP had capital buffers sufficient to get through the adverse scenario, and the remaining 10 firms collectively needed to add $75 billion to their capital buffers to reach the target. Nine of those banks were able to fulfill their additional capital needs through the private market. Only one institution, Ally Financial (formerly GMAC), required additional funds under TARP to meet its SCAP requirements but received it through the Automotive Industry Financing Program, not CAP.


Program Status

CAP was closed on November 9, 2009 without making any investments. After the stress tests results were released, banks were able to raise hundreds of billions of dollars in private capital.