Wells Fargo – Stress Testing Public Welfare Investments

Under the Comprehensive Capital Analysis and Review’s (CCAR) severely adverse scenario for banks subject to global trading shock, most public welfare investments (PWIs) in real estate (including affordable rental housing) are assumed to lose 62.9% of their value, except for a 2% loss rate for most tax credit investments. 1 While this loss rate may be appropriate for luxury apartment investments, affordable housing and other PWIs have performed much better through the financial crisis.