Bank Stress Test Methodology Text Analysis Part 1

The Bank Stress Test Text Analysis. I run the Design & Implementation document released by the federal government through a number of text analysis dictionary's.

The study shows good validity in that many of the different dictionary's converge and diverge on similar and/or dissimilar topics. The conclusion is: 1) The Fed Govt is thinking (shocking I know). 2) They are talking about banks, loans, debt, etc. We are not being lead astray. 3) They are using MANY affective words. Negative emotions out weight positive emotions. 4) There is poor hope of the future. The dictionary's show there are few forward looking statements. 4) There is A LOT of denial within the document. Suggesting the document is talking about what it CAN'T do, not what it will do.

Final Conclusion: I would not trust the results of the bank stress test (i'm sure you knew this already).

The Supervisory Capital Assessment Program: Design and Implementation
The SCAP process was extensive. In early March, firms submitted their projections to the agencies, which included significant amounts of detailed data. Supervisory teams, organized by specific asset classes, revenues, and reserves, evaluated the substance and quality of the initial submissions and, where appropriate, requested additional data or evaluation of the sensitivity of projections to alternative assumptions. The supervisors also developed independent benchmarks based on firm‐specific portfolio characteristics against which they evaluated the appropriateness of the firms projections for losses and resources that would be available to absorb losses. Results for each firm also were evaluated to assess the sensitivity of the firm to changes in the economy based on projections under the baseline and the more adverse scenarios. The evaluations drew on the expertise of more than 150 senior supervisors, on‐site examiners, analysts, and economists from the agencies. Senior supervisory officials made the determination of the necessary capital buffer for each BHC.

Category:

People & Blogs

Tags:

• Bank Stress Test
• BHC
• Citibank
• Wells Fargo
• TD Bank
• Federal
• government
• Stress
• psychology
• affect
• economy
• positive emotions
• negative emotions
• text analysis
• Diction
• denial

[jtl215731]

Good Job Andrew..Thank You for the informative analysis..