Federal regulators released the much anticipated methodology to the stress tests performed on the 19 largest U.S. banks to assess their capital needs under a worsening economy on Friday. "Most U.S. banking organizations currently have capital levels well in excess of the amounts required to be well capitalized," the Federal Reserve said in a white paper. "However, losses associated with the deepening recession and financial market turmoil have substantially reduced the capital of some banks." Banks including Bank of America ( BAC), Citigroup ( C) , JPMorgan Chase ( JPM ), Wells Fargo ( WFC), Goldman Sachs ( GS), Morgan Stanley ( MS), PNC Financial Services ( PNC), Bank of New York Mellon ( BK) and smaller regional banks were among those that the government tested. In all, 19 banks with assets over $100 billion participated in the government stress tests, which started Feb. 25 and were completed over the course of two months. Those banks hold more than two-thirds of the nation's assets and more than half the loans in the U.S. banking system. The report estimates that these banks took approximately $400 billion of losses in the six quarters through the end of 2008. "Given the heightened uncertainty around the future course of the U.S. economy and potential losses in the banking system, supervisors believe it prudent for large bank holding companies to hold additional capital to provide a buffer against higher losses than generally expected and still remain sufficiently capitalized over the next two years and able to lend to creditworthy borrowers should such losses materialize," the paper said.