by Calculated Risk on 3/13/2012 04:22:00 PM

From the WSJ: J.P. Morgan Spurs Fed to Move Up Stress-Test Results

The Federal Reserve will release the results of its latest stress tests today at 4:30 p.m. Eastern time, two days before it had planned to unveil the sensitive review of big banks.

The schedule change came after J.P. Morgan Chase & Co . sent out a news release announcing it had passed the stress test. ... Bankers were scrambling Tuesday after the unexpected timing of J.P. Morgan's announcement. ...

The Fed had planned to release the results of this year's Comprehensive Capital Analysis and Review, or stress tests, on Thursday afternoon. It decided to move up the timing after some banks had disclosed their results, the Fed said.

The stress test scenario was announced last November and is outlined here. Here is a look at the house price scenario (the Fed uses CoreLogic).

Click on graph for larger image.

The first graph shows the nominal prices for the CoreLogic index. The adverse scenario was for prices to bottom in Q1 2014 at about 17% below the current price (it was 20% further when the stress tests were announced, but prices have fallen).

For the baseline scenario (not shown) prices would bottom in Q3 2011 at close to the current level.

The second graph shows what would happen to the price-to-rent ratio for the adverse scenario assuming a 1.5% annual increase in Owners' equivalent rent (OER).

This would put the price-to-rent ratio about 15% below historic lows. Three words: Not. Gonna. Happen.

The "adverse" scenario was severe.