Thursday, May 28, 2009
UK bank stress model sees house prices down 50 pct
FT: FSA releases ‘not-so-stressy’-test methodology
Hot off the wires at the FSA - the shock announcement of the much-speculated upon UK stress-test methodology. The highlights: Britain’s stress-tests presumed a fall in GDP of over 6%, unemployment at just over 12%, a 50% peak-to-trough fall in house prices and a 60% fall in commercial property prices. The tests assume no return to growth until 2011.
Under the doomsday scenario, the FSA looks at the average house price falling from £186,000 to £93,000.
However, the FSA says it won't disclose individual bank stress tests results.
Posted by little professor @ 10:43 AM (848 views) Add Comment
5 Comments
- If you do not have an admin password leave the password field blank.
- If you would like to request a password allowing you to add comments and blog news articles without needing each one approved manually, send an e-mail to the webmaster.
- Your email address is required so we can verify that the comment is genuine. It will not be posted anywhere on the site, will be stored confidentially by us and never given out to any third party.
- Please note that any viewpoints published here as comments are user's views and not the views of HousePriceCrash.co.uk.
- Please adhere to the Guidelines
1. will said...
What is the point of telling us what the tests involved if they will not tell us the results of the test? I beleive they have something serious to hide, so why trust the 'green shoots' story?
2. little professor said...
The FSA's version of housepricecrash.co.uk, blocking out all the bad bits:
http://recessionblocker.com/results.php?uri=housepricecrash.co.uk
3. icarus said...
Will - I second that. How are the criteria applied e.g. in deciding whether or not Barclays needed to raise new capital or whether Lloyds and RBS could participate in the Asset Protection Scheme? And if a bank technically doesn't meet a test could there be an 'executive decision' to exempt it?
Core Tier 1 capital of at least 4% of risk-weighted assets? Who weighs the risk? Moody's, Fitch, S&P? Or some other organisation that gave AAA ratings to CDOs?
And most of the shenanigans that caused all the bother weren't on the books of the banks but on those of the shadow banks and the shadow banking system that was an outgrowth of the banks and operated in tandem with them - institutional agents like hedge funds, SIVs, conduits and private equity groups and products like CDOs and CDSs with AAA ratings. All of this enabled the banks to expand leverage massively off their books. Does this stress model take this into account?
4. contrails are not a conspiracy (formerly npnh) said...
Nice one LP!
5. timmy t said...
If your kids came home with their GCSE results and refused to tell you what they got, you'd probably assume they failed. You'd also be thinking about their need for financial support because they would be unable to.... hang on, I think I can see what's happened here...