Analysis of Subtitle D Financial Tests in Response to Public Comment, 1996

Analysis of Subtitle D Financial Tests in Response to Public CommentsThis report presents the findings of the updated (1996) analysis of financial test alternatives forfinancial assurance requirements under Subtitle D. The 1996 analysis evaluated 27 financial test alternativesthat were identified as the best performing tests (i.e., providing the lowest combination of public and privatecosts) in prior analyses conducted for the proposed Subtitle D financial test. The prior analyses examined eachof the 27 tests with a minimum net worth requirement of $10 million. The 1996 analysis examined each ofthese 27 tests in conjunction with minimum net worth requirements of one, five, and ten million dollars, for atotal of 81 financial test alternatives. The 1996 analysis also examined the public and private costs of twovariations of the “Meridian” financial test (submitted by commenters on the proposed financial test revisions),at each of the same three minimum net worth requirements, for an additional six financial test alternatives.Finally, the 1996 analysis also examined the public and private costs of the 1982 Subtitle C financial test forSubtitle D firms, and the private costs of allowing no financial test for financial assurance. Detailedinformation on the data, methodology, and results of the 1996 analysis are presented below in the followingsections:• Section I: Analysis Methodology and Available Data. Section I describes the methodology used ...