There s been much talk lately about the stress test that the government is using to assess the health of the nation s largest banks. Now finally, there s some information about what that test involved.

On Friday the Federal Reserve released a report on the guidelines that its examiners used in its so-called Supervisory Capital Assessment Program, which was designed to assess the banks' ability to endure a further decline in the economy. Although details were scant, the report gives a general idea of what the stress test entailed.

Here are some of the key points:

* The banks were asked to project their credit losses and revenues for this year and next, including the level of reserves that they would need at the end of 2010 to cover expected losses in 2011.

* Projections were made based on two different economic scenarios. A "baseline scenario" that reflects the Fed s February 2009 economic expectations, including an average 8.8% unemployment rate in 2010. And the more adverse scenario, which illustrates a longer and more severe recession, with the unemployment rate averaging 10.3% in 2010. The more adverse scenario also includes a 22% drop in home prices and a 3.3% decline in the real GDP in 2009, as well as a 7% drop in home prices and almost flat (0.5%) GDP growth in 2010.

* Banks had to provide supporting documentation, including information on projected income and expenses. The Fed s examiners developed independent benchmarks based on the portfolio characteristics of each bank to decide whether the bank s loss estimates were appropriate and how the bank would absorb those losses.

* Each bank s projected losses, revenue and changes in reserve were combined to evaluate the amount and quality of capital the bank would have at the end of 2010. If a bank was found to have less capital than projected by the stress test under the adverse scenario, it would have to augment its capital, or create a capital buffer that it could use to offset losses if the economy turns out to take an even bigger turn for the worse than expected.

To read the full 21-page report, click here.