In a speech last night at the Federal Reserve Bank of Atlanta's Financial Markets Conference, Federal Reserve Chairman Ben Bernanke acknowledged that "[p]rojecting credit losses in an uncertain economic environment is difficult, to say the least," but nonetheless expressed confidence in the results of the Supervisory Capital Assessment Program (SCAP) given "the intensive, painstaking nature" of the assessment process. He also emphasized that "the loss estimates we obtained significantly exceed those experienced in past recessions," noting that other studies, including the IMF's most recent Global Financial Stability Report, have assumed loss rates that are either higher or lower than those used in the SCAP, but that "our projected loss rates for key portfolios near the midpoints of the ranges of these independent estimates."

Responding to criticisms of the chosen SCAP capital buffer levels, Chairman Bernanke noted that "common equity ratios in various guises are viewed by stockholders, bondholders, and counterparties as key measures of solvency, because common equity provides superior loss absorption and greater financial flexibility than other forms of capital. Because of these attributes of common equity, our bank holding company capital rules require that voting common stockholders' equity make up the dominant portion of Tier 1 capital elements. In the context of the assessment program, we have structured the required capital buffer to ensure that, under the adverse scenario, each of the 19 firms would have a minimum 4 percent Tier 1 Common ratio at year-end 2010. ... Importantly, the '6-4' metric used to size the appropriate capital buffer does not represent a new capital standard and is not expected necessarily to be maintained on an ongoing basis."

On a forward-looking basis, he stated that "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."